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Can a person that owns two homes, walk away from one without losing the other home?

Everett, WA |

I have two homes, two mortgages on the one and a construction loan in the process of being turned into a 30yr fixed mortgage. I can no longer afford to make payments on all three, and am wondering what will happen if I were to walk away from the house that has two mortgages on it? I don't have a lot of assets- own my older car, etc... what would the repercussions be and is there a better alternative?

Attorney Answers 3


Typically, the primary lender ("first mortgage") will take ownership of the home via a trustee's sale, as opposed to filing a lawsuit. If the lender does that, then it will not be entitled to pursue you for any "deficiency" judgment (amount by which your debt on that first loan exceeds the proceed from the trustee's sale). The second lender, however, will be able to pursue you for that debt (second mortgage or HELOC) via a lawsuit. Depending on how far "underwater" you are and which lenders are involved, you may be able to negotiate a loan modification, or manage your risk and reduce your obligation to the second lender via a short sale.

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I agree with the above attorney and would add that often times an attorney is able to negotiate a settlement with the second lienholder for cents on the dollar, depending on your situation. Washington foreclosure law is favorable towards homeowners and an experienced real estate attorney can help you navigate your situation. Our firm has had great success in negotiating with banks in your scenario.

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I would agree with the other two attorneys. The first mortgage on both houses will foreclose, and the second mortgage, if not paid, would be able to obtain a judgment against you and continue to collect. If they obtain a judgment, the judgment would be good for 10 years, and could be renewed for an additional 10 year period. I would consider negotiating with the second, and or evaluating your bankruptcy options.

Disclaimer: I provide information about the law designed to help users safely cope with their own legal needs. But legal information is not the same as legal advice -- the application of law to an individual's specific circumstances. Although I go to great length to make sure my information is accurate and useful, I recommend you consult a lawyer if you want professional assurance that my information, and your interpretation of it, is appropriate to your particular situation.

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