Multiple Home Foreclosures

If you own more than one home and are facing foreclosure, you are probably worried about the bank going after your second home if you are unable to save the first. Bank representatives and armchair foreclosure experts will threaten you with being sued again and losing your other home, having your other assets repossessed, and maybe even having your bank or retirement accounts stolen or wages garnished. Fortunately, however, many of these predictions will never turn into reality.
The issue of foreclosure does need to be taken seriously, though, and finding out your options should be the first consideration. The first thing you should do is consider various other solutions instead of just letting a house go through the foreclosure process. Try and get as much time as you can from the bank, even if a sheriff sale is coming up; the bank can postpone any foreclosure proceedings in the local courts or cancel an auction to give you more time to work on a solution.
You might want to consider trying to list your house for sale, even if you have to do it with a short sale and convince the bank to take less than the total amount you owe on the loan. Otherwise, if there is really no way to save the home and the lender is unwilling to do a short sale, you can offer the bank a deed in lieu of foreclosure, which will, upon the bank’s acceptance of the offer, stop foreclosure and allow you to give the house back to the bank instead of going through the entire legal process and seeing your house auctioned off by the county.
But if the house does go into foreclosure and you do lose it to a sheriff sale, this does not mean the bank can go after your other house or any other assets you still possess. A number of different requirements must be met for a bank to try and sue you again after the foreclosure. Most of these requirements are easy to meet, but the last one usually guarantees that the bank will not take the time to pursue another lawsuit to go after your other personal items or additional homes.
First, the house has to sell at the county auction for less than the total amount owed on the loan at the time of the sheriff sale. This is usually pretty easy to meet, since the bank will have added thousands of dollars in fees so that no one in their right mind (not even the bank) would pay that much for the house. Usually, it is the foreclosing bank that places the only bid on the property, and they bid the minimum amount, so the house is likely to sell for far less than the total amount owed. The bank will end up with the property and a convenient write-off for the lost portion of the debt.
Second, your state has to allow deficiency judgments in the case of foreclosure. Not all states allow this in their foreclosure laws, so make sure you look up your law and find out if they can sue you and under what circumstances. Even if the lender is allowed to pursue another lawsuit, the type of foreclosure used, whether judicial or nonjudicial, can also be a determining factor in how difficult it will be to start the lawsuit and how it must be pursued.
Finally, you actually have to have something of value that the bank would want, usually some highly liquid asset the bank can easily seize. That does not mean having another home, to be clear. If the bank got nothing back from you on this foreclosure, what makes you think it would be worth their time to go after your other home? Would they get anything for their time and money, or would they most likely just get stuck with losing even more money when the home sells for too little at an auction to pay off even the existing mortgages, let alone a deficiency judgment?
So, maybe the bank could go after your other house after you lose one. But, in practical terms, banks almost never do this, since it just is not worth their time. It costs them more to hire attorneys to sue you for the original foreclosure, then sue again after that for a deficiency judgment, then sue you again for foreclosure on your other home because of nonpayment of the deficiency judgment. And in the end, they will probably still end up with nothing to compensate them for their total expenses.

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