Posted on 10/21/2009 9:27:58 PM PDT by Positive
My ex-wife died about two and a half years ago.
She had purchased a home in Southern California after our divorce for $250,000.
I can’t help but mention that some of the funds that she used were provided by me by order of the divorce Court.
Well, we have two children, one 18 the other 16.
Since she belonged to a cult religion that believes that there is no disease and that medical care is unnecessary, she therefore made no preparations for a possibility of her death. No Will, no Trust, no life insurance.
Well the kids asked me to come and be the parent….
Of course I felt compelled to do so.
I have been making the mortgage payments, through probate and beyond, approximately 28 months.
At this point I will end the personalization of this situation. I would like to just open a discussion of the mortgage crisis.
The house here is now in the name of the children.
The mortgage remains in the name of the deceased borrower.
The Probate Court Valued the house at $425,000 as of the date of death… Probate court and attorney fees were paid on the basis of that valuation.
I recently paid a certified real estate appraiser $275 and the appraisal came back at $200,000.
The balance on the loan is $230,0000….so the deal is about $30,000 underwater and I’m throwing $2000 a month into this black hole.
I have spoken with the bank about modifying the loan to make the payment substantially lower and they are stonewalling me.
I have spoken to some professionals in the industry and they tell me that if we were to let the house go to foreclosure (keep in mind that neither the kids nor my name is on the loan so no damage to our credit) the costs to the bank would amount to $50,000 to $75,000. That’s if they were able to sell it at the appraised value immediately.
Additionally, there’s the hit to their balance sheet. The non-performing asset becoming a liability and the risk that the property could decline substantially having been abandoned.
As a businessman, I just can’t understand why the bank doesn’t seem to understand that adjusting the terms of the mortgage is in their best interest.
Is there a catch here that I just don’t understand?
Let me mention that the bank is small and is losing money at an alarming rate… they may go under.
If we have experts here, I would really like to hear opinions, explanations and advice as to how to handle this deal.
It is a game of chicken. You don’t want the anxiety that goes with foreclosure proceedings and they want to use that against you to keep paying “for the children”.
If you are willing to go all the way, there is a good chance they will back down and modify the mortgage.
They want you to blink first. You want them to blink first.
I have a family member who is struggling with a mortgage payment. Fell behind, caught it up, fell behind again, caught it up. Talked to her about requesting a modification, and after speaking with her mortgage servicer, they are unwilling to even discuss it. When pressed, the response was that she had not fallen three months behind, and if she did, they’d talk to her then.
My guess is, they’re afraid of the dam breaking and everybody demanding a modification, if those who are not already in serious trouble are also permitted modification.
Very counterproductive in certain situations, such as yours. But, that’s what’s going on, imho.
If there is no equity in the house, and neither you nor your children would take a hit, I’d let it go, barring some sentimental attachment. There’s no legal or moral obligation to carry that note.
Not an expert, but I did stay at a Holiday Inn. . .
If the small bank writes down the loan, the “hit” to their equity might add enough to their other losses to reduce their equity below state requirements.
Or, they could be praying for a miracle to bump prices back up.
If mortgage is not in your name, you should be able to recover all or part of your funds from probate assuming any funds there.
parsy, who knows not your state’s laws
Stop. Immediately. Let Barry and the Sheeple pick up the pieces.
Remember, contracts and agreements touching land and real property are supposed to be in writing (and signed by them) to be enforceable. There are a few ways around this, but there usually needs to be some “reliance” on their promise. At least confirm stuff in writing if possible.
parsy
Seems the bank is bluffing you, maybe you should call their bluff.
Seems the bank is bluffing you, maybe you should call their bluff.
You sound like an upstanding member of the conservative community. I consider myself the same. I am divorced and remarried. Have kids. So I can place myself in your situation.
The bank won’t consider a refi since you are keeping the loan current. You need to stop paying the payments. This may be trumatic for the kids, but if they don’t want to live with you..there are lots of rentals available for $2000 in CA. Once the loan is past due by 60-90 days and the bank knows that they won’t get any more payments on the current loan..they may consider a loan refi or short sale.
But not until they aren’t getting paid. They may not foreclose for months and months..so your kids can continue to live there, but they will get lots of notices.
If you want refi..it will be difficult without an adult on the title/loan. So you will need to sign with the kids.
Good luck, but it is probably a lost cause..so just stop paying and make other arrangements for your kids.
Seems the bank is bluffing you, maybe you should call their bluff.
Remember, contracts and agreements touching land and real property are supposed to be in writing (and signed by them) to be enforceable. There are a few ways around this, but there usually needs to be some “reliance” on their promise. At least confirm stuff in writing if possible.
parsy
I agree. I’d stop paying but wouldn’t leave the house. Eventually, the bank will contact you and be willing to negotiate ...
Oops the computer keeps locking up.
I am not an expert, but it seems that banks in trouble are very reluctant to recognize any losses. On the one hand the FDIC may be poised to take them over if their situation is precarious, on the other hand the FDIC may be purposely looking the other way for the time being because they can only take over so many failing banks at a time. Or the regulatory regime is so gentle that the banks are not forced to truly account for their losses. Either way the decision makers at the bank are not motivated to take any active steps to clean up their books. There are many stories of homeowners in situations worse than yours (they have stopped making payments) who are asking to be foreclosed upon, but the banks won’t move.
What did she pay for the house at time of purchase? A 60% drop in value sounds high even in this market. What area is the house and has the house been maintained? If you can live with that appraisal then you should probably walk away on the other hand there are darn few houses on the market for $200,000 in most parts of Calif.
My grandson is trying to buy a very small home (850 sf) in a bad neighborhood for $130,00 in depressed Eureka Cal but he is waiting on a loan approval which I doubt he will get. This house is in probate also and I told him to see a lawyer NOW before he signs anything more...
Just stop paying them and see what happens.
Listen to Parsy, a wise man.
I’m sorry but I see she paid $250,000 for it but how many years ago?
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