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Mortgage & Foreclosure - Please Help Me!
Let's make a looong story short:
My H and I were looking into buying a house ... I contacted a Mortgage Co for a preapproval ... they pull a credit report and tell me that my H's report shows a mortgage going into foreclosure ... I'm thinking it's fraud, I contact my H and he says "oh yeah, i've been meaning to tell you ...."
So, apparently, 4-5 years ago my H signed as a co-borrower/co-signer on his parents' mortgage. Apparently my in-laws have not been paying their mortgage and the foreclosure process was initiated about a year ago. Needless to say, we had absolutely no idea this was happening ... any mail that was sent to my H as the co-borrower was sent to his parent's house and was never given to him, he didn't know enough to check-in on his parents every month to make sure they were paying, etc. etc.
According to my H his name is also on the deed/title of the home, but we do need to verify that.
My H and I are meeting with a lawyer this week to see what we can do to protect ourselves, etc.
Does anyone have any advice? Questions I should ask the lawyer?
Re: Mortgage & Foreclosure - Please Help Me!
Oh yikes, I am so sorry! This is a really tough, though easy to get into, situation. Unfortunately, the bank (and lenders) will not care that it was his parents home. In their eyes, he is just as responsible.
Time to get proactive and creative. First, talk to his parents and get copies of all the information about the default and foreclosure. How far behind are they? How much will it take to get current? Can the bank work with everyone (his parents and him) on getting back in good standing? He should also contact the bank as soon as possible and get his current address added to their information for all mailings.
Now, about his parents house? Is it one you would consider living in? Would they be willing to work together with your husband to get current and then move out and let you move in? I ask because many times people are looking for a way out but they don't know how to go about it. Do they still need a home of this size or are they ready to downsize? Can you all live together for a while and get the payments back on track. Then, sell the house at a better time? Or will his parents quit-claim the house to him and he can take over ownership & payment on the mortgage? Can it be rented out at a rate that will cover enough of the payment that the house can still be held on to? Even if he & his parents have to pay into it each month, if it can be held onto for a while, then maybe it can be sold in the future when the timing is better (on the market or personally).
Once the foreclosure is stopped, you can also look into a loan modification as a possibility.
If there is any way to stop the foreclosure, consider it very heavily. The foreclosure will remain on his credit for 7 years. Unfortunately, the fact that this many payments have been missed is already been reported on his credit and will also remain there for a long time.
All that being said...all is not lost! There is hope. It is time to be creative. See what you can do. The hard part will be the emotional distress. No doubt his parents are very upset by the default and for the damage to your husbands credit. No doubt he is upset too. But it is time to put that all aside (Ha! Easier said than done, I know!) and work together to find a solution. It may not be easy or ideal but it will be worth it in the long run.
I'm sorry to hear about all this and I wish you all the best. It will be hard but if you all work together, you can find a solution.
Good luck!
Lighthouse State Beach, Santa Cruz.
Wow what a crappy thing of H's parents to do. Honestly, his credit is probably trashed for the next several years and the only hope of you (together) buying a house is to have it in your name/income/credit only. I would be sure to ask the lawyer if the bank who owns your in laws mortgage can come after your (H's or your combined) assets and if he will be responsible for paying the difference between what they owe and what the bank recovers through a sale.
Are your H's parents just not able to pay like they had a medical emergency or lost their jobs or are they just choosing not to pay? I think this would affect how I feel about them ruining your H's ability to get good financing in the future and would probably want to cut them out of my life if the situation needed. Also pull H's credit to make sure he's not responsible for anything else you don't know about.
Thank you for sparking some good questions for us to consider with the lawyer.
Regarding the home - - we would absolutely NOT want to live in it - it has not been taken care of whatsoever, I mean they really did a number on the condition of the home. Additionally, it is not local to where we live.
I'm thinking if my H's name is on the deed, then he may have the right to take ownership of the home and make his parents pay us rent, and if they don't pay rent then we would unfortunately have to evict. Otherwise, sell it?
I'm hoping the lawyer can help us with our options...
Regarding why they did not pay - - who knows. They certainly work, have income, etc. they obviously do not budget properly (I mean seriously wouldn't you rather a 50" tv than pay your mortgage? j/k...)
At this point, what really upsets me most is that they didn't tell us, and that by my H and I marrying, I am now brought into the ordeal and I don't think my in-laws understand this.
Thanks for the follow up.
In my best guess, if he is on the mortgage, he is probably on title. A simple title search may or may not show him as an owner. With a little digging by a title co or attorney, it can be found out fairly easily.
Whether or not he is on title it is time for some changes. It may be too late at this point but he can talk to his parents about getting his name taken off the loan. Since it is already in default, the bank probably wont do it at this point and they almost certainly wont release him from his responsibility under the loan. When a person co-signs, they are equally responsible in paying on the loan. As a lender, they aren't going to let go of another live body to go after for the money. Once the loan is made current, if possible, then I would see if you can get taken off the loan.
It is possible to put a lease into place with his parents. When there are multiple owners, and one owner occupies the property, they owe compensation of some sort to the other owners. IF you & your hubby want to step in and take over the financial responsibility completely, you can lease it to his parents (get a written lease!!!), and make all the payments yourself. They will not owe a full rental rate since they are part owners too. They may also argue that they have paid on the mortgage for 3-4 years (prior to letting it lapse) and have more ownership than he. But in an effort to save the home, you could set up the lease, make all the mortgage, taxes & insurance payments. I would also work on getting it in better shape - especially structurally and funcitonally. Cosmetically can wait. Treat it as a business, just as you would if you owned a rental. Hubby would be responsible for the remaining money owed each month. Then, when it comes time to sell, he gets a portion of the proceeds as a partial owner. What makes it murky is that they have lived in it for years and paid for it for years. They also paid all the taxes, insurance, utilities, repairs etc...at least for a while. The best thing you can do, if you all try to go forward and save the house, is to set some very clear boundaries and guidelines. From this point forward, ownership is a third/a third/a third (him/mom/dad). All money owed is the same. If insurance is $1000, they each owe a third. Now, as I say this, I want to point out that it is all subject to negotiation - what feels right for him and his parents. Then, handle all the bills the same way. Then, also, when tax time comes, your hubby gets a third of the write offs (mortgage payments, insurance, maintenance), which will be great for him. That's the benefit
Now, in regards to you in relation to all this. Talk with you hubby about how you both want to handle it going forward. He purchased this property prior to your marriage. You can both decide that it is his sole and separate property or you can decide that you are a part owner too (depending on your state - ask the attorney). Personally, I might consider leaving it as his sole property under this circumstance. It is murky enough as it is. As his sole property, he can still will it to you (and your kids or future kids) or place it in a trust. But if it is at risk of foreclosure, you may want to see if you can keep it off of your credit for now.
No matter what, get a written lease in place if you go that route. Also, get a separate checking account to handle all the income and expenses on the property. It will make everything much easier for you & hubby, it makes things very clear if there is ever any court action. Set it up in a very business like manner since you don't live there. Even if you don't do the lease route, talk with the attorney and his parents and set out some basic ground rules about who is responsible for what between all parties.
Good luck!
Lighthouse State Beach, Santa Cruz.
This might be a little harsh and I don't know your income relative to your H's income to see if it would be possible for all financial things to be in your name for the future until his credit is rebuilt. If the inlaws weren't maintaing the house then it might not be worth the amount of the mortgage. This would make it very very difficult to refinance the house or change it so that you are paying the mortgage and the IL's are paying you rent. Also, do you have the funds (how much ever they are behind) to get them current and stop the foreclosure process and honestly, do you want to throw all your hard earned and saved money into your IL's house??? To me this seems to be throwing good money at a bad problem if the house isn't in the condition it needs to be to sell or to be worth the amount of the mortgage. I wouldn't especially since they are buying unnecessary things instead of paying the mortgage. Do you and H want to be that involved in harrassing the IL's every month for "rent" and make sure the mortgage is paid every month? It really just goes back to what happens if it goes into foreclosure - Will your H be responsible for any money, will the bank come after his assets and cash or will it 'just' be a black mark on his credit?
Honestly, I would have a really really REALLY hard time bailing out my IL's with my savings because they wanted a 50" TV instead of paying the mortgage. Additionally, this "foreclosure" proceedings will be on H's credit report for the next several years as a note and if something is worked out and H is still on the mortgage (which I assume he would have to be as the IL's credit is probably screwed from other things) this will still count againt you as you try to purchase in the future. I hate recommending someone going into foreclosure but honestly, it's not your house and as long as the lawyer, you and H all agree it might be the best thing to get rid of this mortgage by letting the bank have the house and leave the IL's to fend for themselves.
DS1 born June 2008 | m/c at 9w March 2011 | DS2 born April 2012
DO NOT do this without talking to a lawyer first. The bank can absolutely come after you for the deficiency so you need to figure out whether you need to be proactive before he bank takes action. Perhaps you can work on a short sale (get a realtor to put the house up for sale and get bank approval to sell for less than the loan amount), this way you can possibly get a waiver of the deficiency. Check to see if your city has a "cash for keys" program, where the bank agrees not to come after you or your ILs for the deficiency if you agree to turn over the house to them without any damage or destruction.
I definitely think your DH made a huge mistake here but I think you've received some good advice. You need to speak to someone ASAP about your options because the bank can come after you and DH for the amount due on the mortgage post-foreclosure. Your ILs sound like really horrible people, I'm sorry they've put you in this situation.
First, I have to say....WTF....your DH "forgot" to tell you a minor detail that he is on title for a house during your house hunting preparation? That is not something you forget... the nonchalant attitude toward major details and long term planning may be the same attitude his learned from his parents, leaving you with a long uphill battle.
Please, please check with an attorney before you do anything else. Several states have community property laws that may attach to you and other laws that require both credit reports and financial status to be submitted for loan approval, even if only one spouse is funding the purchase.
My first and only questions would be directly to your DH before anything else. How could he FORGET to tell you that he was listed as a cosigner on a home. That's not something minor in my book. I'd be PI$$ED with DH if he ever did something like that. I'm getting this is probably before you got married but I'd still be mad regardless for not telling me. That affects your financial future as well. I'd also then question DH about what else he "forgot" to tell you.
Sorry to be harsh but it's true.
Thanks for the advice everyone.
We met with a lawyer today...
Basically, to protect ourselves all of our assets would have to go under my name (our credit is considered seperate). The payments are way too behind for it to become current/caught up and I will not put a penny towards this home. At this time our best option is a sale, however, yes, they will go after my husband for a deficiency after the sale which means they could garnish his wages and it leaves my husband and I to live on my salary alone.
Hopefully we can convince the in-laws they need to sell and cut the losses...
Unfortuntately, both your inlaw's actions and your husband's INactions led to this point and it is going to be a very costly lesson. Sadly, you are going to pay for his dishonesty to you.
I am really curious--what reason did your husband give you as to why he did not tell you about this sooner? I would be LIVID if I found that my husband was keeping secrets from me (especially this HUGE). You just don't "forget" that your name is on a mortgage and "I've been meaning to tell you" when your parents' house is going into foreclosure. I hope that you have a serious talk with him and have him reveal all the "secrets" he has been withholding from you so that you can move forward with all the facts.
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