If I own2 properties and have mortgages on both with the same lender, can the lender put a lien on the second property if the first goes into foreclosure?
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If I own2 properties and have mortgages on both with the same lender, can the lender put a lien on the second property if the first goes into foreclosure?
If so, what if I pay off the second property before the first goes into foreclosure, can they do anything to the second or to me? I am unemployed and receiving unemployment. I have no assets other than qualifying retirement accounts.
Asked on October 14, 2011 under Real Estate Law, Michigan
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
Whether or not your lender can file a warranted lawsuit against you if one of your properties goes into foreclosure and there is a shortfall between what is owed on the loan and the property's ultimate sale depends upon whether or not which property goes into foreclosure (your primary residence or not) and if the loan on your primary residence if purchase money (and if your state has anti-deficiency laws regarding purchase money loans).
A purchase money loan is when a property owner buys a home for his or personal residence and the loan is never refinanced. The property then goes into foreclosure and the property is resold for less than the amount owing on the loan. In such a situation an if your state has laws precluding the lender from suing the former property owner for the deficiency (anti-deficiency laws), the lender cannot sue the former owner for the shortage on the loan.
In light of the above answer to your question and your desire to pay off the loan on one property, I suggest that you immediately consult with a real estate attorney about your situation.
Good luck.
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