Expert Advice When You Need It Most

I stopped paying on 1st home after I closed on 2nd home. Will I lose equity on 2nd home purchased with draw from my IRA?

Asked almost 3 years ago - Riverside, CA

I moved my family to another state to avoid pending layoff. The new job I took payed $1200 less a month. The valueon my 1st home was $220,000 less than the loan balance.I had a 1st 75%and a 2nd 25%. I stopped making payments on the 1st & 2nd after the banks refused to negotiate until I was behind 3 months. I continued paying the gardener and a handyman who did small repairs and painted the interior of the house. I purchased a second home using my parents as co-signors. I took an early withdrawal from my IRA for the down payment.. Taxes still need to be paid on the draw. Could I be in trouble for buying the 2nd house before taking care of the 1st house? Am I at risk for losing my equity?

Flag

Save

Share with:

Attorney answers (1)

Joseph Robert McFaul

Reputation Level 9

Answered almost 3 years ago. Business Attorney in Irvine, CA.

Flag

The exact answer depends on the location of your state, how the first home was financed, whether the first home goes to foreclosure and how the foreclosure was accomplished .

Are you at risk for losing your equity? Yes, there are circumstances where you may be liable for deficiency judgments if the first house is sold at a loss and a judgment is obtained against you. The judgment can be enforced in your new location as a "sister state judgement." There are protections such as a homestead exemption that may protect your equity in yoru new home even if a judgment is obtained. A lender may not be able to obtain a deficiency jdugment depending how it forecloses and how the home was financed.

Mark as good answer

1 person marked this answer as good

Add comment