If Ihave2 houses mortgaged with different banks, if one house is foreclosed on, can that lenderalso foreclose on the other house?

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If Ihave2 houses mortgaged with different banks, if one house is foreclosed on, can that lenderalso foreclose on the other house?

The house I was renting out is being foreclosed. The loan and title are in my name as well as my spouse’s name. Home is mortgaged by Lender A. They are now foreclosing on it. I have a second home titled and financed in my name only by Lender B. Can Lender A take action above taking the house they were financing? Specifically, can they put a lein on the house financed by Lender B?

Asked on November 1, 2010 under Real Estate Law, Ohio

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

A mortgagee can only foreclose on property on which it holds a security interest (mortgage).  Since Lender A only holds a mortgage on House 1, and it is a different entity than from Lender B, Lender A not cannot foreclose on House 2.  However, if the sale price at the foreclosure auction (sheriff's sale) is not enough to pay off the remaining mortgage balance, plus costs,on House 1 then your Lender A can obtain what is called a "deficiency judgement".  Generally, at that point Lender A can go after your other assets and seize them (as well as any of your wife's assets since House 1 is in both of your names).  As a practical matter, Lender A would at best would likely place a lien against House 2 and be paid off (plus interest) at such time in the future that you sold or re-financed it.

Since you didn't give much by way of the specifics in your case and there may be some form of exemption, etc. that applies, you should consult directly with a real estate attorney in your area.


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