I don't know marital property law as well as I would like, but my gut says that yes, the house is marital property unless it was characterized as something else in a marital property agreement before buying it. I strongly suggest sitting down with someone familiar with marital property law and real estate law and the Wisconsin property execution exemption amounts for a brief consultation. As a legal matter, I think the bank could pursue any excess equity you have in your Wisconsin home. As a practical matter, the New York bank seems unlikely to be smart enough to know that they might be able to do that. You may want to talk to a bankruptcy attorney about your situation also if you don't intend to pay any deficiency you may come to owe on the NY mortgage.
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You need to find out whether the lender in NY is pursuing a deficiency balance on the loan first of all. If no deficiency is being sought, then you have no worries (about the first mortgage at any rate).
Next, you need to understand how collections work. If a deficiency balance is being pursued, the lender will need to come after your spouse in Wisconsin. Its first preference will be to garnish your spouse's wages.
The last option would be to pursue any property your husband has. If you purchase the real estate and it is designated as non-marital property, it would be very hard for the creditor to go after it.
My response to this question does not create an attorney-client relationship and does not consitute legal advice. The information is provided as a courtesy only. This format of written question and answer is too informal and lacks sufficient detail. It is almost never possible to give quality legal advice without a full set of facts and the opporutnity to have a dialog where questions are asked and answered. Moveover, posters on the internet should be aware that confidentiality is not guaranteed online. I am licensed to practice law in WI and IN.
Your question raises several issues. Is there a deficiency judgment being sought by the mortgage holder? If not, end of story. In a short sale with the borrower leaving the state, there may not be so that the redemption period can be shortened. Check on that first.
Generally, when one seeks to enforce a judgment obtained in a different state, the obligation arises out of the state where the judgment was obtained. Therefore, if the mortgage holder is seeking a deficiency judgment, you should talk to a NY lawyer as to your obligation on the debt under NY law?
My response to this question does not create an attorney-client relationship and does not consitute legal advice. The information is provided as a courtesy only. DO NOT RELY UPON INTERNET COMMENTS. Seek legal advice with an attorney who has the full set of facts and the opporutnity to have a dialog where questions are asked and answered.