If I build a new house default but on an existing mortgage, what could happen?
Question Details:
We have a mortgage on an existing house that is greater than the value of the house. We also are paying on a lot that we wish to build a house on that is also valued less than what is owed. The lot loan is a balloon due and I can't find a viable option for refinancing. If I build the new house on the lot, try to sell the existing house but can't and stop paying the existing house mortgage when we move into the new house, can the lender of the existing mortgage come after the new house or what would happen?
Can't tell you for sure what the result will be, since the law in different states varies and the terms of mortgages do, too. If your mortgage (and/or state law) prohibit "judgments over" for amounts due under mortgages but not covered by the real property in question, you'd end up with a lousy credit rating but not a former creditor with a lien against the new site. Otherwise, all your property is at risk if you default on a real estate loan.
Hope this helps,
William A. Price
Attorney at Law
wprice@growthlaw.com
