Posted: Wed Feb 27, 2008 5:02 pm Post subject: foreclosure-on deed but not mortgage
Hi,
Recently my parents did a quitclaim deed and put a property in my brothers and my name. They stated it's our inheritance. In February my mom told me that they can no longer make the mortgage payments and that we would have to pay if we want to keep the house. We cant make the payments so the house will probably go into foreclosure. Im worried this will affect me and my credit score negatively. How would I be affected if the house is foreclosed? I'm on a quitclaim deed but not on the mortgage. _________________ Need help choosing the right loan? Get free consultation from community lenders/consultant
Though you are not on the mortgage your credit will still be affected if it is foreclosed as you are the present owner of the property. I think it will be better for you to quitclaim the property back to your parents if you cannot afford the mortgage payments. The mortgage is still in your parent’s name. So better quitclaim to the parents to avoid any negative affects on your credit.
Since you will not be able to make payments, talk to the lender and explain him your situation. Involve your parents too in the meeting because you still don't have your names on the loan but your parents have.
One way of dealing with this problem is, sell off the property to pay off the loan. But I don't know whether you or your parents want to keep this property? because if you sell, you'll have to stay in a rented house till you have the funds to afford a new home. This is better than going for a foreclosure and having your credit tarnished.
The other way is to quitclaim back the house to your parents if they are willing to take it back at all. Then ask them to take a reverse mortgage if they are 62 years old and above. as soon as they get the loan proceeds, they'll have to pay off the current loan.
With a reverse mortgage, your parents need not make monthly payments, the loan needs to be repaid only when they pass away and that can be done by selling off the property by the lender. Even you may sell it if you wish to stay there as an heir.
Know more about reverse mortgage before you can think of it as the best option for your parents right at the moment.
My parents aren't over 62 so that wont work. I already have a home of my own so I dont have to worry about finding a place. I think I'm going to have to quitclaim deed it back to my parents before it gets too late. We're currently trying to sell the property to at least cover what is owed. My guess is that it wont sell in this market for the amount we need to cover the loan. I'm mostly worried about my credit rating and the foreclosure appearing on my record. My wife and I had plans to start a family, sell our small 2 bdrm house and buy a bigger house to raise kids in. We're worried that since we are on the quitclaim deed that a foreclosure would hurt us dramaticly(sp?). We've been working on improving our credit by paying off credit cards and stuff so that within the next year we could afford a larger place. If the foreclosure is going to appear on my record we may not be able to afford another loan. Im also worried that if the bank sells it for less than the mortgage, that I will have to list the loss as income on my taxes. Thans for the advice. Wish me luck. If anyone else has any ideas, please let me know. I'll try anything.
Posted: Thu Feb 28, 2008 1:40 am Post subject: RE: avoid foreclosure
Hi Guest,
Welcome back.
Has the lender spoken about foreclosure till now? have you been in default or is it just that you think you cannot afford anymore?
Please discuss the issue with the lender as he might have options to help you pay off the loan comfortably, may be with another repayment plan that your parents or you can afford to go along with. Do your parents have mortgage insurance policy? it can help them repay the loan.
There are alternative options to avoid foreclosure . Please take a look at them before you decide upon anything.
Quote:
Im also worried that if the bank sells it for less than the mortgage, that I will have to list the loss as income on my taxes
However, there are conditions under which your parents (as they are having names on the loan and not you) qualify for the tax break. By the way, in which you are in? because the law is not yet effective in California.
larry
