Mortgage change problem

**reptile411** · 06-25-2009, 01:02 PM

I would be upfront about it. Its sad but true if you truly can not afford to keep the house its better to loose it than risk getting a huge dent on your kids credit but that's just my thinking. Are you making all your payments on time and in full now? If so I fail to understand how the bank can foreclose on someone that keeps up with the payments. It was explained to me getting the loan was the hard part but once you have it they don't care how much you make or where you make it as long as you give it to them on time every month.

**Junebaby** · 06-25-2009, 01:41 PM

We were behind by six months but this week we paid five months. I took a loan from my life insurance and cashed in the 401k from the job I lost this May. We will try to make payments on time now, of course, but if I tell them Daughter wants out, will the monthly payments be less? She is pissed that we didn't get her off already.

**happygirl** · 06-25-2009, 02:16 PM

How old are these adult children? I'm assuming they are 20-40ish?

I would do whatever I needed to do to get both my children off the deed regardless of age. If that means losing your home and having to find a rental until you can save the money yourselves, that's what I would do. If you aren't comfortably able to make the payments every month, you not only risk damage to your finances, you risk their future finances as well.

Good luck with this difficult situation.

**disneysteve** · 06-25-2009, 03:24 PM

If you fell 6 months behind on payments with your children named on the mortgage, you have already trashed their credit. I'm afraid your daughter may have a great deal of trouble going out and buying her own home now. Get the kids off the loan ASAP so they can start rebuilding their financial lives, no matter what that means for you and your husband.

**ernesto sidi** · 06-25-2009, 04:37 PM

Here's the problem I see. when you try to refinance on your own, the bank will see that your income has gone down. You may not qualify for a refinance, and your daughter may be stuck on the loan for the long haul.

Even if you had never fallen behind on payments, new refies are approved based on credit score and income, just like they used to before the banks started approving anyone with a heartbeat.

Here's what I would propose to your daughter and her fiancee. She has a financial stake in the house, period, no way around this. Now give her an equity position. What I mean is that you should offer to put her on the title. Make her part owner of the house. If you need help with payments, as her for help once in a while, or even set up some recurring payment schedule where she contributes with $100 or whatever she can afford, to ensure you don't fall behind again. She can also share in the mortgage interest deduction when filing taxes, so she can get some of that money back.

Make an agreement between your daughter, your husband and you that, when things pick up, you will sell the house and she will be entitled to some percentage of the profits. Let's say that in the next 4 years she contributes $5000 in mortgage payments. Offer her a $10,000 steak in the house. When you sell, if you're left with $50,000 in profit, give her 10k and keep 40k. That's a 25% return for her year over year, which she can use as a downpayment on her new home. Then you and your husband can downsize to something smaller and cheaper, where you can afford to finance it on your own.

I did something similar with my mom. She had been renting a house for $1100 for about 7 years. I offered the landlord to buy the house from her. My morgtage payments were $1600, so i wrote my mom a check for $500 each month, so combined with the $1100 she'd already been paying in rent, that covered the mortgage. However, when the 1098 statement came in with the mortgage interest, I used the entire amount on my taxes, which gave me about a $5000 return, so I got back almost all the money I gave her over the year. She got to own her new house. And when it was sold, she kept all the profit. I didn't ask for any of it, but that was just our situation.

Ernesto

**Junebaby** · 06-26-2009, 05:09 AM

Thanks for the advice

You all have given me things to think about.
The bank will not foreclose now because we only owe one month, but they will do some kind of deal to reduce the payments and I don't think it's a refinance. We have to fill out the papers before they tell us what they will do.
Daughter will stay on board for a few months while we decide the next step. I told her if she helps us make the monthlies on time her credit will start to go up, then we'll get her off well before the wedding.
Son is helping by working a little overtime so he has more to put in.
Both our kids will benefit when we sell. They will get some of the profit, but not so much that we can't get another home for ourselves. Selling now would mean taking a loss.
Husband is the problem. He has always been in charge but I think his priorities are backwards. I would have paid the mortgage first, then served plain rice for dinner if I had to.

**Shane Watson** · 06-26-2009, 07:01 AM

You are in a real bad situation. Now there could be many things that you can do. But before anything you need to let your daughter leave the loan plan. Other wise she will be pulled in this for sure. If she is out than she would be able to do something for you later on. After that get a time extension. Try debt settlement "do your self". It works. Than you can try refinancing.

Good luck

**Joan.of.the.Arch** · 06-26-2009, 07:09 AM

Shane, it is not up to the poster to let her daughter out of the obligation. The daughter signed onto the mortgage and has contractual obligation with the lender. Now of course, the poster could try to cover the daughter's obligation, but the poster is here saying that the family does not have the money even among four people.

**creditcardfree** · 06-26-2009, 07:37 AM

Originally posted by Junebaby View Post

We were behind by six months but this week we paid five months. I took a loan from my life insurance and cashed in the 401k from the job I lost this May. We will try to make payments on time now, of course, but if I tell them Daughter wants out, will the monthly payments be less? She is pissed that we didn't get her off already.

Monthly payments are based on the term, interest rate and balance of the loan, not on how many names are on the mortgage. You monthly payment should not change based on removing daughters name alone.

I don't blame your daughter for wanting out, you have put her in an awful position. Get both adult kids off that mortgage as soon as it is possible.

Are you both actively seeking employment...of any kind? You need to show the ability to pay by having jobs that can support the mortgage. If not, you are going to lose this house.

**ernesto sidi** · 06-26-2009, 07:10 PM

Like Joan said earlier, it's not up to the mom to get the daughter off the loan. It would be up to the bank to consider qualifying the parents alone for a refi, which I think won't happen. If it does, then it would be a very high risk loan, which they don't do anymore, which would require some cash down, and a very high interest rate.

What's done is done. There are two options going forward. Option A) foreclose and lose the house, ruin everybody's credit, have nowhere to live and lose any equity you ever have chance of having. Option B) Step up to the plate and get this situation in the right path by making on-time payments. The daughter and son were used initially to co-sign because the parents could not qualify on their own. Well, their situation is even worse now, so they definitely won't qualify now. I really respect the son working overtime to help. Both kids need to step up, work some OT, help with the payments. Maybe one kid pays the insurance, the other pays the taxes. they together contribute another few bucks and help with the principal and interest. Stop eating out, cancel cable TV, don't use premium gas, whatever, go on a financial diet, whatever it takes, make it work.

When things pick up, sell the property. Split the profit whichever way you see fit, and downsize. If needbe, rent for a while and save up. A house as a home is great, but as an asset comes with a lot of risk, maintenance, upkeep, repairs, insurance, gardener, pool service, taxes, etc. These are liabilities that you don't have as a renter, and sometimes it's better to rent for a while until you get yourself back on your feet.

Ernesto

**Junebaby** · 06-27-2009, 10:06 AM

Downsize??!!!

Pool care, gardener??!!
OMG I WISH. There is nothing here to downsize. It's a tiny 1960 three bedroom, no dining room, on 1/3 acre and it's smaller than the apartment we had on a busy street in a busy city with a high crime rate. Now we're in a quiet neighborhood and it's so relaxing and peaceful and we can plant FLOWERS and I'm NOT EVER GOING BACK TO THE CITY.

So please, moving into a rental makes good financial sense but it would be detrimental to our mental health. Also, it's not a good time to sell a house. We have to hang on until the prices come back up or we sell for less than we paid. Right now we would not get much more for it than we owe the bank, so there would be nothing to start over with.
Anyway, Daughter and Son are signing the papers today. Daughter will get taken off in 6 months or less. And we go the the bank this Monday to talk some more.
Stay tuned!

**ernesto sidi** · 06-28-2009, 01:02 AM

Wow, almost 2k feet on 1/3 acre? That's a nice place. When can I move in?

Best of luck with the bank. I know they are pulling some good deals throught he home affodability program, below 5%. I just refied at 4.875% on a 7/1 ARM, and it cost me about $3400 in closing costs which were added to the loan. I would recommend a short program for you, to take advantage of lower interest rates. Certainly not a 30 year conventional, as you will find goes for much higher rates than an ARM. One other thing you may be able to do to drop the payment amount is amortize over 40 years, rather than 30. Not sure if it's available anymore, or what the difference in cost is, but if costs the same (APR and closing), then it would also help lower your payment. You can always make bigger payments from time to time or pay it off early. Also ask about early payoff penalty, where you get hit with a % fee if you pay off within 1 or 2 years. Stay away from that. I got hit with $1800 when I sold a property too soon a few years ago.

Good luck and let us know how you did.

Ernesto

**Junebaby** · 07-01-2009, 11:24 AM

No answers yet

We took the paperwork to the bank but they will review it, then get back to us. I had thought there would be a meeting today. So we don't know yet what will happen.
We are loading up some nice stuff to take to a flea market this weekend. I hope we make good money, but if we only earn enough for the groceries for July, that's OK.

And FYI, our house is not 2K, as someone thought, it's 900 square feet.

**anonymous_saver** · 07-01-2009, 11:47 AM

That sounds like it's a difficult situation on everybody. But I really don't see how you can afford this home. If you needed to take a loan on your life insurance and use your 401(k) money, I think the best thing to do is get out of this house, and get into a living situation that you don't require your children's signatures. It may mean renting for a while, but I think it would take a huge amount of stress away from you and all of your family. How much income do you and your husband make now, and how much of a mortgage do you have?

Mortgage change problem