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I've been reading up a little. It seems there are special federal law protections for a child to inherit a house and live in it, assume the mortgage just by notifying the mortgage company. No new mortgage needed.
Garn-St. Germain
The Garn-St. Germain Depository Institutions Act of 1982 allows relatives inheriting mortgaged homes to take over their mortgages. Under Garn-St. Germain, you won't need to refinance your deceased parent's mortgage or even assume it. Just notify your deceased parent's mortgage lender that you're inheriting your parent's home, will be living in it, and will be making the mortgage payments. After inheriting your parent's home, you might need to obtain a new deed in your own name.
There are also protections offered by certain states for a child who lives in a home, to inherit this home, and its protected from creditors such as medical bills. They cant force him to sell it to pay the mothers bills.
Last edited by 399083453; 08-16-2013 at 08:36 PM..
I don't know if anything is in probate still, he had a family friend helping him the first few months and that may have all been taken care of without the young man even realizing it. From talking to the mortgage company it sounds like the bank hasn't received full payments and has put off taking any action for about six months (during and after the illness) and that they need to move forward with some kind of decision now.
Apparently mortgage co already did a search for liens, etc.
Discovered the house was refinanced some time ago. Interest rate is still up there somewhere, and payments beyond his ability to catch up and keep up with, so he is unable to assume mortgage as is. He hasn't been working long enough at his current job to refinance or qualify for any type of loan.
One fairly small lien and several years unpaid back taxes too, sigh. Not looking promising. Think we are looking at a deed in lieu unless we can come up with an investor willing to buy on pretty short notice. I would imagine if the hospital is putting a lien on the house too that the house won't even be attractive to an investor?
Going to look further into the rest of the financial situation too. He did sign for funeral expenses and may have signed for hospital too. I find it really odd that the funeral home even took his signature considering his lack of employment history, and worse that the hospital may have asked a grief stricken family member to take the on the financial burden of a comatose patient. The deeper I dig the more I think we are just looking at damage control at this point.
I was afraid of this being the situation. Yes, I suspect, the total of the debt burden may be far greater than the worth of the house. You'll have to get final numbers and sit down and figure that out.
No one is going to be able to buy the house unless you know what the debts are. The estate is going to have to be able to pay off the taxes at any closing, plus any outstanding mortgage. So you need to know exactly what is due for all. I also suspect, in the end, that deed in lieu of, is going to be your best option.
As for the hospital and the funeral home, yes they will happily strong arm anyone they can find who will agree to pay for expenses. And no ,they don't care about a person's grief or confusion. They're just worried about their financial bottom line and finding someone to pay the bills. To you and I it's wrong, but that's life.
I agree, damage control is important at this point in time. Try to take control of the situation. Your young friend is too inexperienced and naive in financial matters. Sharks are eating him alive. I hope you can get him off the hook for some of the hospital/ funeral costs.
That poor kid, losing his parents so young and now this. I am so glad he has you to help him.
It sounds like he might need a new lawyer. Can you go with him to meet with the lawyer, or be present via speakerphone?
Can he get some roommates to help pay the mortgage? He'll need some advice about that, too -- local landlord tenant law, etc. The same real estate attorney should be able to help.
I think we may have an investor! Hoping to make enough to at least pay for the funeral with maybe a bit left over. Negotiations underway soon, so a whole new area to look into!
Is it worth getting an agent or do you think just using the mortgage company for the paperwork will be adequate for such a transaction?
You need a real estate attorney at this point in time to represent your young friend's best interests.
He's already in a mess.
The attorney will write the contract and make sure the investor is on the up and up, He''ll also take care of the closing and deal with paying off the bank and any other creditors..
You could hire an agent but you will still need an attorney. For your type of situation, you're best off just using a good real estate attorney and foregoing an agent. You've already got a buyer, so no need for an agent to find one.
Hmmm, in TN the usual custom is not to use an attorney, not at the lower price ranges anyway, so I suppose it varies from place to place. But you bring up an interesting point, since the home is located in a neighboring state and I really have no idea how it works there. Time to dig around some more. Thank you, you've been very helpful.
If you're in a state that normally closes with a title agent that's fine for the actual closing. But who is going to write your real estate contract, take and set up escrow accounts for the down payment, determine if the buyer actually has the ability to buy the house, etc.
A real estate agent could do that but may want a real commission fee far greater than what an attorney would charge. Ask around and see what prices are. The reason I suggest an attorney is to protect your friend. He's in such a mess. Selling a house is not a do it yourself project for the clueless.
This isnt a normal transaction. It sounds like the house is still part of the estate. You need a lawyer to protect his financial interests, not just the real estate end.
What if he can keep the house, live in it and just make the payments? Isnt that an option? Sounds like after he sells the place he will be homeless.
He'd like to live in it, but can't refinance and the payments are out of his reach at whatever the interest rate is on it. Even if he could afford it I wouldn't recommend it, the payments are too far out of line with what a house that size and in that condition is worth. Think he'd be better off renting something he can actually afford, maybe start saving a little, and trying to establish credit and go the normal home buying route if that's what he wants in the future.
If a real estate lawyer is a less expensive alternative to a real estate agent that sounds good, although it will be a new experience for me. Would the mortgage company be allowed to 'suggest' lawyers or am I stuck picking one out of a phone book?
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