Short sale and owning 2 homes, Wanting to keep one of them.

My daughter owned her home for about 5 1/2 years and it has about $40,000. in equity. She got married in November of 2008 to a man that owned his own home that was bought in April 2008. His home has no equity at all. In fact his home is upside down by about $20000. Their credit card debt is massive to which they are working on big time. They are upside down on 1 car and about even on the other. In the state of Tennessee when you get married his debt is her debt and vice versa. My question is…
If they would want to short sale his home but keep hers would they come after the equity in her home. Or does the short sale go just with the home that the mortgage is on? What do they have to do first?

A short sale is on just one home. Additionally, if the short sale is done correctly, most of the time, the bank waves the deficiency judgment so no other assets would be affected.

Even if she had owned the property herself, the answer turns on whether they meet the legal definition for “hardship”. In your daughter’s case, even though Tennessee is a community property state, only the equity earned during the marriage is community property. Presumably, only his name is on the mortgage note as well as the deed to the property. It is apparent that the husband would meet the definition of hardship, and on the face of your question, he appears qualified to sell the home in a short sale. :biggrin