Can Banks Take My Main Home If My Second Home Is In Foreclosure?

April 30, 2021 0 Comments

If the second home is foreclosed on, the homeowner will remain responsible for the balance of the home’s deficiency. Different laws have different statuses regarding this situation, but most allow the bond holder to file a lawsuit against them in court because after the foreclosure sale, the remaining balance becomes unsecured debt. If the creditor wins in court, which is likely, he will be awarded a judgment against him that will allow him to collect by garnishing wages, withholding bank accounts, and placing bonds on the property. In some states, the creditor may even force the sale of your main home.

Often, in order for an unsecured creditor to force the sale of your home, they must first pay off the mortgage on that property and pay you an “exemption” amount. The more equity you have in your primary residence, the more likely it is that an unsecured creditor will force the sale of that property. This is because they are more likely to get money from a home with little left on the mortgage compared to one with significant debt.

Bankruptcy is not a viable option if you intend to keep one of the properties. However, you can try to get rid of secondary property by instigating a deed instead of foreclosure. This is not much better than a foreclosure, but it does insure you against several possible repercussions that a full foreclosure can have.

However, it is advised that this method is not used except in extreme circumstances where you are already certain that you will lose your home. This will not be considered a complete foreclosure and the lien holder will not be able to take action against you for bad debt.

Leave a Reply

Your email address will not be published. Required fields are marked *