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Are You Defaulting on Your Home Loan? Team
UpdatedJul 22, 2007

Can a lender make us sell our second home to pay down debt?

I have a home equity loan taken against my primary home in California to pay in full for my 2nd home in Montana. Now I can't afford payment and may default on the loan. Can a lender make us sell our 2nd home to pay down debt?

Unless your home equity loan agreement specifically listed your home in Montana as additional security on the loan, the lender cannot force you to sell your home in Montana to repay the home equity loan secured by your home in California.

However, if you do not make the payments on the loan, the creditor can foreclose on your primary residence in California, which I would think is a larger concern than the prospect of losing your home in Montana.

Foreclosure is a difficult and costly process, both for the lender and the homeowner, so you should try to avoid it if at all possible. Since you own two homes, I encourage you to sell one of the properties to ease your financial burden -- or to refinance and lower the total obligation.

If you want an introduction to pre-screened mortgage lenders, makes it easy to compare mortgage offers and different loan types. Please visit the loan page at Mortgage Refinance Quote and find a loan that meets your needs.

You can either sell the second home in Montana to pay off your home equity loan, freeing yourself from the payments on that loan, or you can sell your home in California to pay off your mortgage and home equity loan. Which home you decide to sell will depend on your future plans. If you are planning to move to Montana in the near future, it may be best to sell the home in California and rent until you are ready to move. However, if you plan to stay in California, you should probably sell the Montana home and use the proceeds to pay off your home equity loan.

I wish you the best of luck in resolving your financial difficulties.

I hope this information helps you Find. Learn & Save.




BBill, Aug, 2009
Try to avoid foreclosure if you can. Three ideas in order of impact on your credit score, from least impactful to most: 1) Look at the Making Home Affordable program. It may not apply because you are not residing in the home, but look into this program anyway for ideas on negotiating with your lender on new terms. 2) Consider a short sale. Read more about short sales in my reply to another reader Foreclosure Short Sale. 3) Consider a Chapter 13 bankruptcy.
DDoug, Aug, 2009
We moved for job related reasons and now own a home that is worth about $130,000 less than what we owe. We are leasing a home in our new location as well as assisting my parents on their home. What options do I have? We have always had good credit, but I have spent $40,000 of my saving in the last 18 months trying to keep current.
SSamuel, May, 2009
You really need to consult with an attorney who is an expert at foreclosures to see wht your best course of action is. You would ideally do this before your home went into foreclosure, but it's not like the lender can go put a lien on your other property right away, there are several procedures to be followed and only after a court ordered judgment will they be able to do so. As I said, please consult with an attorney.
SSandra, May, 2009
I am age 67 in a townhouse in Virginia that I paid $298,000 for in 2003. I had planned to sell in about 5 years when my daughter was able to have me live near her. Now the market is defunct, my house is now worth $112,000 and I have little or no equity. The town houses are being auctioned at $79,000. I need to short sale or default before next year. My brother and I own a house in Tennessee. Should I give my part to my brother so it won't be pulled into the equation? Is there a time limit to do this in oder to protect it from a lien?
BBill, Nov, 2008
Depending on when they initiate foreclosure, the process could take up to a month.
kkarin rivera, Nov, 2008
im going to default on my home loan we cant make the payments any more how long do i have before they force me out how long can i continue to stayin the home before they kick me out
BBill, Jun, 2008
Rick, if you default on your current mortgage, your lender will eventually start the foreclosure process. Once the home is auctioned off, and if the proceeds of the auction are not enough to satisfy the outstanding debt, then whatever is left over will be considered a "Deficiency balance". Now, this debt will be considered unsecured as there no collateral against it now. The lender might try to collect on this debt in pretty much the same fashion as any other unsecured debt. The recourses available to your lender in collecting this debt would depend on your state laws. For more information on collection laws, please visit A foreclosure has a pretty big impact on your credit which could last for as long a 7 years. I suggest that you try and work out some sort of an arrangement with your current lender, and even discuss a "Short sale" or a "Deed in lieu of a foreclosure" with them. For more information please visit I hope this helps you.
RRick, Jun, 2008
I lost my job in Michigan and moved to Georgia for a new job. I'm getting no offers on my empty Michigan home at a zero equity sales price (a $70K loss). It is costing me $1500 a month to sit empty. If I was to default on that loan, could the lender come after me for future wages or other assets the were not collateral? How long would my excellent credit rating be trashed?Please e-mail me your answer.
NNate, Nov, 2007
You should check your credit report immediately. You can get a no-cost, no-gimmick credit profile at If you see that the mortgage is reported in your name, it will have an adverse impact on your credit score. As far as loosing your current property in California, I don't think there is an immediate danger. But the recourse on mortgage default vary from state to state and you should consult an attorney to discuss your current situation.
RRobert and Karla Bechkoff, Nov, 2007
We thought we pruchased an as yet built home in florida. we live in California, now the investment co, the developer and the real estate brokers have all closed their doors and we don't know if we have a house or not. the contractor will not even return our calls. Even though the original lender has not informed us they have "sold" our loan, we are being pressured by a another lender to sign their loan documents. Ee have already sign documents with someone else. What this comes down to is, what will happen to us if we simply default on the loan (we don't know if we even have one) can we loose any real estate property that we own in California? Thank you