I'm currently looking into the idea of buying a multi-family home in Brooklyn via an FHA loan. FHA loans seemed like they could take some of the risk away of putting down 20% (i.e. a high % of all my money) leveraged 5x on one illiquid bet in exchange for paying PMI and higher closing costs.
So, I'm wondering if that's actually the case. What happens if I lose my job, the rent roll can't cover the mortgage+repairs, all my due diligence fails stupendously, and it seems destined to be a long term loser. Can I walk away with just losing my closing costs and a credit hit for 3 years?
OR - since New York is a recourse state - can they sue to garnish wages/assets to make up the difference between sale price and amount left on the loan? Can they do that even if the foreclosure sells above the prevailing market price but still under the amount left on the loan?
EDIT: I read somewhere that NY is a one option state - meaning the lender either has to accept a foreclosure or can garnish wages/assets to keep paying the mortgage. If that's true, then am I right in thinking they can and will just simply opt to take my wages and assets indefinitely since they know I have both?