If our home is collateral on an SBA loan for my husband’s restaurant business and the loan goes into default, what happens?

The collateral in our home is probably only 50K and the loan amount is 265,000. Do I, as the co-signer,

become responsible for the loan and will they take my home?

Asked on March 11, 2017 under Business Law, Georgia

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

1) If the home is collateral and  the loan goes into default, then yes, they can foreclose on and take the home.
2) As a cosignor, you are as personally liable for the loan as your husband.
3) In your state, if the  $265k loan defaults and they take your $50k home ($50k worth of equity) and apply it to the loan, that leaves $215k outstanding; they can then sue you and your husband for that outstanding balance. They can foreclose *and* sue in your state.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

1) If the home is collateral and  the loan goes into default, then yes, they can foreclose on and take the home.
2) As a cosignor, you are as personally liable for the loan as your husband.
3) In your state, if the  $265k loan defaults and they take your $50k home ($50k worth of equity) and apply it to the loan, that leaves $215k outstanding; they can then sue you and your husband for that outstanding balance. They can foreclose *and* sue in your state.


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