Need help with foreclosure proceedings

[vcgcr]

My jurisdiction is: Long Island New York

We own two properties. One is our primary residence. The other is being rented. We are loosing our tenant and cannot afford the mortgage payments. I also recently lost my job.
We have been struggling for over a year now to make the payments. We would happily sell the house and pay off the debt but in this market conditions it is not possible.
If the second house goes into foreclosure, will that affect our primary residence? We can affort to keep the home we are living in, but not the second house.
What other options do we have? As of today, we are not late on payments, but since we are loosing the tenant, we don't even know if we can make next month's mortgage.
Any answer would be appreciated. Thanks.

 

[dee_dub]

Generally, unless the mortgage is over both properties, foreclosure on one mortgage will not affect the other property. A couple things come to mind, however: your other mortgage might provide that foreclosure proceedings in another matter may be presumptive default. Or the lender might seek judgment against you personally if there is any shortfall, so you might wind up with a judgment registered against your primary residence.

 

[vcgcr]

to Dee_Dub: Thanks for the clarification. Do you know what legal steps, if any, we can take to protect our home, before anything happens to the second house? We are hoping that we can sell the house and pay the debt, but no good news on that so far.

 

[vcgcr]

Thanks for your response above, just a quick question:
If we can sell the second house on a short sale, will that afect the house we live in, or any other savings we have?

 

[vcgcr]

Does anyone know what legal steps, if any, we can take to protect our primary residence and savings, if we do a short sale on a second house? Can a revocable Living Trust help? Any advice would be greatly appreciated.

 

[dee_dub]

As far as your question about the short sale: if you do it right, it shouldn't affect your residence or other savings. In a short sale, the bank agrees to take less in satisfaction of the mortgage than you owe; they don't have the right to go after other assets of yours. However, if you HAVE other assets, the bank might be less inclined to settle for a short sale.

I'm afraid I can't help you with your other questions. Those are very fact-specific and depend on the laws of your jurisdiction. You need to speak with a local lawyer.

 

[vcgcr]

Thanks dee_dub. By other assets I meant the house we live in, a cd savings account and my husband is partners in a business, we have no other properties. I will follow your advise and contact a local lawyer. Thanks again.