Forum Archive

I was looking at the Property Shark records for 669 Classon (http://www.brownstoner.com/brownstoner/archives/2009/02/how_unfortunate.php) and remembered a question that I keep meaning to ask.

It goes something like this:
financing a purchase with multiple mortgages seems to be fairly common. Or it was at one point. I was working out a mortgage on a building I didn’t end up buying and our loan officer came up with a similar plan to what PS shows on Classon. One traditional loan and a second HELOC. In our case the numbers were about 50/50, and we were planning to put 20% down. At 669 the second loan was more like 10%, but they only put 10% down.

I believe that if you are foreclosed on in your primary home, the bank can’t come after you for more than the house itself. Even if you have a million dollars in the bank, a lender can’t take more from you than the home. That isn’t the case for secondary loans or home equity loans: you could be on the hook for that money long after the house is gone.

So I suppose I just answered my own question, but maybe another question is … are people seeing loans like this? Why don’t we hear more about them in the news?

Loosing your home and down payment is no joke, but losing both and still being on the hook for added money is a far bigger deal.