75 Yr. Old Lady Lost Spouse And May Lose House - HELP!
Hello To All,
An old lady contacted me because she'd heard I help people out of foreclosure. She explained her husband died in May 2004 and left her with nothing. He'd let the life insurance lapse, he withdrew all monies from his retirement about a year or two prior to his death and left her with nothing. Her only income is Social Security (about $500.00 a month). Also, prior to his death he refinanced the home she's living in and has a first mortgage of $75K and second mortgage of $22K. The problem is, she owes more than the house is worth and the house needs major updating which she can't afford to do. Is there someway to work with her bank and fax them her husband's death certificate to lower her pay - off although she and her husband were both on the loan? Any advice you can provide would be greatly appreciated. She's two months behind on mortgage paymens and foreclosure seems imminent.
Thanks,
Lynn
:-?
You can try to short sale the property although in my limited experience I have not been able to get the bank to "deal" until they are much farther behind. You may just want to wait but I'm not sure how you can keep the seller interested to sell.
Also--if her income is only $500 per month is that even enough to rent an apartment for?
What kind of man would leave his wife in a situation like that? I really hope you can find a way to his her.
My Frogger, Thanks so much for responding. And you're right, $500.00 monthly is not enough. I referred her to our State's Office of Elderly Affairs and they interviewed her and she qualifies for elderly housing. It will cost her $60.00 per month, $110.00 Deposit but she will be responsible for her own utilities, phone, etc. It is a small space and she will have to sell all she has. She has a son but he's not in a position to help.
I've done a few short sales, but he problem with this home is it is not in the best condition and it will be very difficult to obtain a purchaser. And with such a high pay-off and 2 mortgages, I don't see a short sale working. The lender would have to take considerably much less due to the condition of the property.
Have you considered taking over the property, getting her approved for section8, and renting the home back to her?
Miracle Homes,
No, I did not think of that but it sounds like a good idea. Not sure how to go about doing it but I'll look into it. Currently her house note on the first mortgage is $639.00 and the second is $225.00. Her income is only $500.00 monthly. Not sure if I want the headache with the property in dyer need but it's worth looking into.
It's a shame her deceased husband blew all the money prior to his death and left this poor old lady with nothing but a mountain of bills.
Thanks to all who replied.
I have been told that it is possible to call the bank and make arrangements to catch up on the back payments, whicle still making current payments--kind of like a forbearance agrrement. She should try that.
But as has been stated by another poster, it is not likely that she can afford to rent this house any longer....unless something changes such as... she finds a tenant, another person that she can rent a room or a basement to.
Here's a thought. It may not do you any good, but here it is anyway. (I'm assuming the first is foreclosing?)
You say she's upside down, owing more than the home is worth. She has no choice but to sell. With that kind of equity position you ought to be able to short the second down to nearly nothing. Offer an obscenely low amount and see what they say.
It's almost a 100% certainty that part of her payment is going to PMI. Perhaps talking to the insurer could help since they'll have to pay out to the lender on any deficiency. Have the insurer put pressure on the lender to stall the foreclosure in order to let her sell the property. Take it sub-to with the shorted second and whatever discount you can get out of the first and sell that thing. It will be a small payday, but good karma.
After reading all posts. I have to wonder what type of person put these people in this situation. She may have been taken advantaged of.
They may have had excellent credit, the lender or broker gave them a no doc loan and now this is what happens to people. She or her representative should contact the state attorney general and have them investigate both loans.
Lori
I would not want someone to do this to my 70 year old aunt.
[addsig]
Actually, if the home is not in great shape, that is very perfect to get a short sale. If the house was in great shape I would be worried. Because of the bad condition, see if you can negotiate with the 2nd mortgage to pay them 2-3% of the 22K & offer the 1st 50%. Take lots of bad pictures, show the bank that they will save money in the long run by doing the short. At that low price you could either fix it yourself or sell to another investor for them to fix. Do the numbers & offer the banks with confidence!
I have gotten several GREAT responses to this posting. I will give it my best shot and let you all know how it turns out.
I appreciate all the wisdom of this group and so glad to be a member. Again, Thanks!
Lynn
Lots of good ideas on this post, but are any of them really going to help this lady? The best one I've heard so far is for her to move into the subsidized housing, but for the most part, I think you would be fighting a losing battle.
Being how old she is, why worry about her credit? She is not going to buy another house ever again, so let this one go into foreclosure. Saving it will provide absolutely no benefit to her.
As an investor, yes, you may be able to complete a short sale and pick the house up for a reasonable price, but as for this lady, she has already lost the home. Unless, of course, someone wants to step in and make her payments for her so she can continue living there.
Too many times we as investors are tempted to do a deal based on emotion (ie. helping out an old lady). You have to take that emotion out of the picture and ask, "Is this a good investment? What is my exit strategy?" etc. etc.
Good luck on finding a solution that will create a win/win for you and her.
Have this sweet lady go with you to the library or some place where you can get to a computer and go to http://www.homeownersaa.org/4134/ this organization deals with loss litigations and should be able to help her. There is no fee to apply and no fee if they can’t help her.
Sounds like the original loan paperwork should be looked at to see if there are any over charges on her loan especially on the HUD-1 and the TILA should be compared to see if the numbers match.
One must look for overcharges and unfounded fees that were wrapped up in the loan , there may be a possible preditory lending case there that may allow her to cancel her mortgage. This kind of thing has been done here in Chicago. With a specialty lawyer who chrges when the case is over.
If a lender is found to have a preditory lending claim that can be proven the bank is liable for at least 3 times the loan amount as described to me.
Many loans have usurous charges, the problem is that people don't know what to look for. Such as TILA and RESPA. This is the only hope for such a predicament. The federal laws cover this across the country. Look up preditory lending in your state and what to look for. She may be able to get what she needs done if the bank sees that they can lose or have a liability. Even when loand are sold or tranferred to another bank they are liable.
This also works with short pay situations depending which route you choose.
I'am not giving legal advice I am simply suggesting a possible option.
Tony Hernandez
Markets International Inc.