If I move out of state and my second home becomes primary and I must short sale or foreclose on the home I am leaving due to structural damage and unable to keep rented am I protected in my new primary home?

As long as there was no lien on your second home securing some or all of the debt on the home about to be foreclosed or short-sold, then you should be. You'd be better off trying to get the lender on your current primary home to agree to a short sale as opposed to letting it go into foreclosure since a short sale essentially "writes off" the debt. However, if it goes into foreclosure instead, then they could theoretically come after your other assets to recoup the remaining losses after the foreclosure proceedings have been completed.

Protected from what?? If your asking whether the foreclosure of one home can have any effect on the interest of another... no. The collateral of the foreclosed home is the foreclosed home itself; nothing more or less. The bank will not have the ability to place a lien on your new home for the default of the old home. The only time I have ever witnessed liens placed on title, other than by the mortgage company services said property, have been on a state or government level, i.e. state tax liens. I do not advice or advocate foreclosing, but you'll be safe.

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Originally Posted by s_cianci

As long as there was no lien on your second home securing some or all of the debt on the home about to be foreclosed or short-sold, then you should be. You'd be better off trying to get the lender on your current primary home to agree to a short sale as opposed to letting it go into foreclosure since a short sale essentially "writes off" the debt. However, if it goes into foreclosure instead, then they could theoretically come after your other assets to recoup the remaining losses after the foreclosure proceedings have been completed.

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Well, the short sale doesn't completely write of the debt per say. The difference between the short sale amount and the loan balance is considered a capital gain and he will be taxed accordingly. So, he looses a large debt and picks up a small debt.