If we own 2 homes, 1 of which we rent and the other we live in, can the bank takethe rental from us if the home we live in goes into foreclosure?
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If we own 2 homes, 1 of which we rent and the other we live in, can the bank takethe rental from us if the home we live in goes into foreclosure?
The rental home is paid off.
Asked on October 29, 2012 under Real Estate Law, Michigan
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
Not directly, no, UNLESS you cross-collateralized the two homes--that is, each home was security or collateral for the mortgage(s) on the other. Assuming you did not do this, they cannot foreclose.
However, any judgment creditor--that is, anyone who sues you and wins a money judgment against you--can put a lien on real property you own if you do not pay the judgment; such a lien would encumber the property and can, in some cases, lead to a forced sale. So if you default on home 1 and the bank, either instead of or in addition to foreclosing, sues you for the money you owe and gets a judgment against you, if you do not pay that judgment, it could potentially lien home 2.
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