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JD, Lawyer
Category: Real Estate Law
Satisfied Customers: 1335
Experience:  Over 11 years litigation experience including eminent domain and real estate disputes
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I currently own a townhome in NJ, but I would like to purchase

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I currently own a townhome in NJ, but I would like to purchase and move into a house. Doing so would mean I probably have to let the townhome go into foreclosure. I have a single mortgage on the townhome, with no equity line. If I buy a house and then foreclose on the townhome, does that lender have the ability to come after any of my other assets? Or would there be any tax consequences by foreclosing on the townhome?

New Jersey law permits a lender to obtain a deficiency judgment against any borrower who defaults and the secured property fails to satisfy the debt at fair market value. This judgment can then be used to assess liens against your property, garnish wages, and execute against other assets.


Foreclosure is almost never a good option. You should make every effort to sell your town home, even if it means walking away with an unsecured loan for some residual balance. In that scenario you would have controlled your losses and protected your credit.


Further, many mortgage loans (on the proposed new home) contain provisions that could place you in default if you default on any other credit obligation... so if you went the route you are considering you could end up with two foreclosure proceedings against you.


Please reply if I can help further.



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