If I foreclose on my income property, can they take my house?

Question

Hi there. I have a house in California that I don't want to lose. I also have a condo that I used as income property in order to buy our house. The rate is about to increase, and I won't be able to afford the condo payments anymore. The condo is vacant (my tenant moved out and the rent rate won't match the new mortgage rate) and it's on the market, but not selling. In two months, the rate goes up to high for me to afford.

If I have to foreclose in two months, if it still hasn't sold (have dropped the price so far that I'm uspide-down, and no equity in it), then can they take my house, too? All payments/taxes on both properties are current right now and always have been.

I don't mind foreclosing if I have to, and I don't care about the bad credit that much (although I really do), because what matters is keeping our house, not the condo. I'm running scared. Any advice for me?

I appreciate any words of advice. Thanks!

Answer 1

If I'm understanding you correctly, you refinanced your condo then purchased the house?

In that case, one has nothing to do with the other, and when they foreclose on the condo, your house would not automatically be forfeit. However, if they cannot sell the condo for at least the value of your remaining loan amount, they can come after you for the difference. They don't always do this, but the do have the right to do so. In that case, you would then become liable for the remaining mortgage amount. How you arrange that payment is between you and the finance company.l

Answer 2

I help people in your shoes in California. No, they can't touch your home. The lender will only foreclose on your condo. They can (and most likely these days) 1099 you for their loss. So when you do your taxes next year, it will show as income.

Don't stress out. Your next move is to do a short sale, that way you can control your loss.

If you're in Southern California (Orange, Riverside or San Diego Counties), shoot me an e-mail and I will look over your situation.

Also, I have to state that I am not a lawyer or an accountant and you should seek legal and accounting advice from a professional.

Regards

Answer 3

Since you own other property the chances of a 1099 are there in which you will owe taxes on the amount written off (as with a bonus about 36%) but most likely will put a lien on the house you do own, so when you sell it you will have to pay back the amount plus interest.