Will bank's foreclosure of my rental home affect my primary residence if both spouses are working?
Real Estate Attorney
The answer is yes. If there is a deficiency after your house is foreclosed on, there is a chance that they will come after you for the remainder of your loan amount. This could include a law suit or other collection activity. You may want to speak with an attorney about a Massachusetts Homestead Declaration.
If the property forecloses and there is a deficiency (meaning the property is sold for less than what is owed), you can expect a claim to be filed against you seeking payment on the claim. Assuming they get a judgment on the deficiency claim, they may then seek payment through a wage garnishment, or may even place a lien on your primary residence. You should speak to a bankruptcy attorney who can help you assess whether chapter 7 or chapter 13 would be the best avenue for you to keep your primary residence, and surrender the rental property.