Has anyone heard of an heir to a property being able to work out a loan mod on a property when not on the mortgage??? The heir is disabled and has applied for disability insurance that hasn't come through yet which would allow him to make the payments on the mortgage. The mortgage is very low in relation to the value of the property and he has been living in the property with his mother who recently passed away and he wants to keep it. Any suggestions would be appreciated as he is afraid to alert the mortgage company that she passed away. He is currently one month behind, but has run out of money.
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"llegal transfer" has nothing to do with legal, it is a term that you bankers made up and I should care? Nope, I don't. It has nothing to do with legal except to scare people as if it is. No, I don't need to learn more about your made up scare terms - as you say, they aren't legal and have nothing to do with law. So why use them except to confuse and scare? Uh, cause they confuse and scare.
So, estates have nothing to do with loans? Oh yeah? Try walking away with the legally assigned property/deed to the heir w/o dealing with the note. Make up all the terms you want, I don't care, they have nothing to do with real law and real consequences. As I said, you can always take it to a real estate lawyer, who doesn't care about your made up terms either. But keep puffing away, Ron, I'm sure you scare some agents into not doing the best job for their client (and actually the bank, too, in cases like this).
I really don't care about your toes, not interested. Only interested in trying to get the best ideas and advice possible to people who ask for help. You'll need to find someone else to play footsie w/you. I guess it is nice for you that some people admire your "better not do anything" "advice" to agents. I don't see that as serving even the bank's interest in this case.
I can understand your passion, but there are times when the best advice given to those who ask for help will run counter to expectations, either theirs, or, perhaps in this instance, ours.
Mr and Mrs Homeowner take a joint mortgage on a home.
Mr Dies.
Mrs is left on the mortgage loan. Repayments are now her responsibility.
To offset the rising costs of the mortgage, due to a reduced income, she takes in a tenant. The tenant is a relative and kicks in additional funds to cover the mortgage payments.
Sadly the payments fall behind and end up with a Notice of Intent to Accelerate (Breach of Contract Notice) being sent out.
Mrs Dies.
Tenant, nephew still resides in the home.
Nephew wants to keep home and sort out a modification. What to do?
This is a sadly familiar scenario that I have had to work with over the four years of working loan modifications.
Unless Nephew is on the mortgage loan himself, he has no standing with the debt. As far as the bank is concerned, he doesn't exist.
He could attempt to take a mortgage out on his own name, pay off the Aunt and Uncle's mortgage, and live happily ever after. Due to his limited income and other circumstances, this is not likely.
We all talk about doing our "Best Job". Everyone wants a happy ever after ending. This is reality, sad to say and sometimes the endings are anything but.
If there is adequate funds in the estate, the house could be bought off. A reduced payoff figure will tend to write off 30-90 days of interest + payments etc. It might even reduce any delinquency that may be outstanding. Such things have been known to happen.
Failing that, there is really little the nephew could do in this case. He's not a signatory, does not have either third party authorization or power of attorney to sign loan documentation. And, in any case, since both 1st and 2nd signatory are no longer alive it is really not possible to sign on behalf of a dead person.
He's going to have to move.
The task of breaking the news to him will need to be far,far more tactful than some of the comments made on this thread thus far.
Passion without civility, is just plain rudeness, and is not professional. It can also paint an inaccurate picture of both parties.
But then I've had a habit of getting through life with rose tinted glasses so what do I know.
I have had to have conversation with homeowners, who, through no fault of their own, have had to face the truth and realities of the situation and be told that they will have to put the house on a short sale in order to reduce their debt tax liability.
I took this conversation very, very, seriously and made sure that they were told the "whys" of everything, as well as what options they might have. For qualified homeowners I was able to secure, either through HAFA, or via the bank/investor, funds for relocation. The lowest amount being $3000.00 the highest being over $8000.00.
We can spend the next several pages on this thread, and elsewhere, slinging mud at the big, bad, BANKS, and how THEY are to blame for all of the ills of society. It will make some here feel good to do this.
However. It takes two people to enter into a contract. It took two parties to sign a mortgage. The fault can be spread to cover both sides. Not everyone who signed on to the sub prime market were blue collar "Archie Bunker"/"Ralph Camden" customers. I have spoken with Professionals, Lawyers, Dr., military officers, as well as teachers, and other white collar professionals.
Guys and gals, rather than sling mud at each other and make an attempt to assign blame on "THE BANK", how about looking at the lessons learned and then EDUCATE our customers accordingly?
One of the best laws that the United Kingdom has, was one that my wife and I were required to obey when we lived there. When purchasing a home we were required to take out an endowment insurance policy on the amount borrowed, that covered the homeowners and the banks. When one party died, the policy would pay off the building society for the amount borrowed. The home is now owned free and clear by the survivor. When my wife passed away, the house payments stopped and my two children, when the house was sold, had a rather sizable amount of money to start their lives together.
If the homeowner in the situation which started this discussion, had taken a joint term life policy for the original balance of the home, and that amount was paid to the bank on the death of the first party, then the nephew would perhaps be able to remain in the property, especially if his name was on title.
As a real estate agent, or a mortgage lender, I would make this suggestion so as to avoid this situation.
Far too many people die, leaving the survivor without adequate means to continue with the mortgage repayments.
How about looking at this instance and seeing what can be done proactively next time (Chest beating about the evils of the banking industry etc., are not allowed.), to avoid this problem. What could Mr/Mrs have done from day one to insure that the house would be secure with the family in case of death? What could the Mortgage lender/Realtor done by way of advice? What could family members have done?
Deal with these questions, here, now. This is a situation that repeats itself on a weekly basis, and unless something proactive is being done on a 1-1 basis with the applicants, there's going to be some more casualities down the road.
Ron, you make assumptions that have nothing to do with law. Incorrect. Illegal transfer? Cute. Have anything to do with our legal system? No. Made up term to scare. What is the bull about secret things going on because you use a trust? Really? booga booga. Don't use the law in your favor, Ron might not like it. Geesh. Putting something into a trust is not subject to "only if Ron likes it". I think you really need to state you have no legal standing in the statements that you make. You really expect people to believe that an executor doesn't have control over the estate/deed? Really? And judges can't judge unless Ron says it's OK? Hmm.. yeah..
Sorry, but trusts are legal, executors actually have authority over estates and banks prefer not to know about this type of use of a trust because they get paid and that makes them happier than when they don't get paid.
Yes, trusts do work and everyone, except Ron, come out happier most of the time, unless something falls short, in which case, it is no worse than if you didn't try to salvage the situation. I gave you enough to do it on your own, but you can look up the process in multiple places and you can have a real estate atty do it for you if you prefer to pay someone to get it done. Basically, you don't have to just sit there with a willing heir to pay and a bank happy to accept the money except the paperwork is not quite right w/o more time. But, you can follow Ron's "advice" and quake in your boots and just give up, if you'd like.
You can probably do an end-run around the bank. Put the property in a trust, probably easiest is to name the heir as trustee. Usually best to call the trust something that indicates "current" owner's name and address. It takes a court order for the bank to get to the trust papers which should be that the heir is now legal owner of the property regardless of mortgage or notes (assumed by the trust). The bank is rarely unhappy so long as they get paid, especially these days.
Since the owner is deceased, there is a good chance that you've already triplely screwed this up by blaring all over the bank that the owner is dead, but maybe not.
It would be best, of course, if the property did not change hands yet. Have the executor assign the deed to the trust. That should be the last thing on public record (which also names the trustee, who will be considered the owner so far as taxes, etc. go - for most departments). Then, on private papers, have the executor sign a new deed to the heir. These are the papers that do not have to be disclosed w/o court order. Publicly, the property is still owned by the deceased (his trust), so mortgage payments by the trustee are protected by law.
You need to deal with fed taxes (and if there are xfer taxes, etc.), this is not a tax dodge, it is transparent to the feds, but not to the banks.
So, you can bypass a lot of the hassle, keep paying the bank and have your heir legally living in the property. Any details you want to work out later, go ahead. But you get the idea.
That is not legal advice, I'm not a lawyer, blah blah, etc.
If she died intestate (without a will), have the disability attorney talk to a trust and estates attorney and probate her estate. He can be named personal representative if he is competent to do so. If there are other creditors, they also would have a potential interest in the probate of the estate.
If the property is under water, and the lender is facing having to do a foreclosure, and your client can qualify, the lender may be willing to explore a new loan or possibly a leaseback arrangement.
Note that if there was a bona fide lease for fair market rent in place between the two of them, your client could stay for the balance of the lease in the event of foreclosure pursuant to the Protecting Tenants at Foreclosure Act of 2009. A tenant must be provided with at least 90 days' notice to vacate after title changes hand post foreclosure sale, and is generally allowed to stay the duration of the lease before having to vacate.
While the 90-day notice aspect always applies, the duration of the lease aspect only applies if an actual lease is active – i.e., not an expired lease that has gone month-to-month, someone occupying it at a below-market rent or via a friend / family agreement, or if the buyer intends on occupying the unit himself. Note the law currently expires on 12/31/2014.
Unless his mother left both a "notarized will" and "notarized trust" making him the executor to all decisions to her assets, medical decisions, funds and personal belongings. Though, that would mean he would need to payoff the mortgage with a life insurance policy if their is one or some kind of substantial savings she might have left him and If that was the case, for a checking/Savings he would only have to have a the "notarized will" and he could have just gone to the bank and withdrew the funds but he must have the "notarized will" with him at time of withdrawal. He would need the "notarized trust" for making any decisions on the home. I know this from personal experience. His only choice is to go to an attorney and get some advice on how he can payoff the mortgage if there was a life insurance/funds account connected to a "trust" for the home. Otherwise, if none of these options are available for him, he may have no choice but to inform the bank and leave. He can not stay there because it could look like he may be committing a fraudulent act on purpose as his if mother was still alive. The banks are RUTHLESS THESE DAYS and could create a lot of damage to his personal record if they find him doing this. Please advice him to go seek legal advice. Good luck...