If I have an out-of-state property that may go into foreclosure, can the lender come after my primary residence for any deficiency?

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If I have an out-of-state property that may go into foreclosure, can the lender come after my primary residence for any deficiency?

I have a condo in NJ that I have been renting out at a significant loss to me monthly. I am currently pursuing a short sale, if approved by lender. If they do not agree to this, and the lender has to foreclose on the condo, can it come after my single family home in NC?

Asked on April 5, 2011 under Real Estate Law, North Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Unless you actually cross-collateralized the loans--basically, made your single family home stand as security for the NJ condo--the lender cannot foreclose on the NC home; there must be a security interest for there to be foreclosure.

However, the lender could, if the shortfall is significant enough, sue you for the balance. If they sue you and win and you don't pay, they could attempt to collect by other means, such as garnishing your wages or putting a lien on other property. If they put a lien on the NC home, they can't foreclose on, but the lien would have to paid off or satisfied in some other fashion before you could sell the home; it would be a cloud on your North Carolina title.


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