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The land-contract gamble

By Benny Kass, Monday, April 27, 2009.

DEAR BENNY: I sold a home in 2006 by way of a land contract. The buyers were making payments to me in order to pay down the purchase price. Recently, the buyers quitclaimed (in lieu of foreclosure) the property back to me. They said they lost their jobs. I received a letter from a mortgage company this week. They are applying for a new home. Any recourse I can take? The property has lost a lot of value in the past year. --Nancy more...

Failed flip flirts with foreclosure

By Benny Kass, Monday, April 20, 2009.

DEAR BENNY: I am retired. About 18 months ago (before the economic crash), I bought a fixer-upper and renovated it, but have been unable to sell it. If I let the property go into foreclosure, can/will the bank that gave me the mortgage try to get at my other assets (equity in my home, stocks, etc.)? --Irvine

DEAR IRVINE: You are asking about a legal concept known as a "deficiency judgment." Let's take this example: You owe the bank $200,000 when you go into default. The bank -- after trying to work something out with you -- forecloses on the property. At the sale, the property is sold for $150,000. The difference -- $50,000 -- is the deficiency. more...

Don't tap that HELOC

By Benny Kass, Tuesday, April 14, 2009.

DEAR BENNY: We have a HELOC (home equity line of credit) at a current interest rate of 4.75 percent. We have not drawn on the account. We are 20 years into a 30-year home mortgage with a fixed rate of 8.75 percent and owe about $32,000. Our home is listed on the appraisal rolls at $306,000. We would like to draw on our HELOC to pay off our first mortgage. We understand that the 4.75 percent is not a fixed rate and will be adjusted monthly depending on the prime rate. We also understand that we must pay interest on it monthly and in nine years will have to begin repaying principal. There are no prepayment penalties.

It sounds too good to be true that we could pay off our 8.75 percent mortgage loan with a HELOC at a current rate of 4.75 percent. Are we missing something? --Barbara more...

Inherit home, refi immediately?

By Benny Kass, Monday, April 6, 2009.

DEAR BENNY: My husband and I inherited a home from my husband's uncle who passed away a few weeks ago. Will the lender expect us to refinance the home or can we just assume it even if it is a conventional loan? --Karen more...

Cancel impound account? There's a fee

By Benny Kass, Monday, March 30, 2009.

DEAR BENNY: Can you explain how a bank can legally charge a quarter of a point of the loan to opt out of an impound account? We have always paid our property taxes twice a year and always on time and have excellent credit. It feels like extortion to me. --Jerry

DEAR JERRY: It may not be legal extortion, but it's close. For years, lenders argued that it was necessary to collect escrows for taxes and insurance (also called "impound accounts") in order to make sure that the real estate taxes and insurance policies would be paid and kept current. more...

Unpaid HOA fees boost foreclosure risk

By Benny Kass, Tuesday, March 24, 2009.

DEAR BENNY: I am three months behind in my homeowner's association payments. Can the condominium foreclose on my unit? My mortgage payments are up to date, and I called my lender who said no, they cannot foreclose. What do you say?

I wrote a letter to the board asking for a payment plan in January of this year, but no response as of yet. I know I owe the money, but I was sick for a period of time. I am planning to pay the back fees with my taxes. --P.S. more...

Intrafamily refi forgoes costs, hassle

By Benny Kass, Monday, March 16, 2009.

DEAR BENNY: I am looking into refinancing my Texas home from a 5/1 adjustable-rate mortgage to a fixed-rate. During this process my mother stated that she would lend me the $150,000 to pay off my existing loan and I would pay her back at the current market rate for a 30-year fixed. This would provide her a stable investment, and I can forgo the closing costs, paperwork, appraisal, etc., associated with a refi.

What are the legal implications of this transaction? If I pay off my current loan do I assume title? What paperwork do I have to sign with my mom to validate the transaction and where do we file it? She would have to claim the income; can I still write off the interest as I would do with any other home loan? Is this transaction as simple as it sounds? --Craig more...

Seller financing without hiccups

By Benny Kass, Monday, March 9, 2009.

DEAR BENNY: We are in our late 70s and have moved out of our house. We are selling the house to our daughter for approximately $338,000 and we are taking back the mortgage.

We have been told the minimal interest rate we can charge her is 1.61 percent without getting in trouble with the IRS. And, it must be renewed each year. Is this correct? Please advise. --Louise more...

When seller financing goes awry

By Benny Kass, Monday, March 2, 2009.

DEAR BENNY: We carry the first and only mortgage on our married daughter's house, which is approximately $200,000. Without our knowledge they obtained an equity loan on the house for $100,000.

Our son-in-law has since lost his job and we are carrying them on the first mortgage. If he defaults on the equity loan, what effect does this have on us? --Joan more...

Tips for paying off mortgage early

By Benny Kass, Monday, February 23, 2009.

DEAR BENNY: I was reading in one of your columns about paying off your mortgage faster by making an extra payment each year. You said to make sure your coupon clearly indicates you are making an extra payment. I did this at the end of 2008, but didn't know whether it should go under an extra payment or payment on the principal. I paid it on the principal because otherwise it wouldn't show up until January as a payment.

I called the mortgage company and could not get a straight answer from them. I was told I could do it either way, which was not helpful. Did I do the right thing by paying the extra payment on the principal? I was setting up our payments to come out of our checking bimonthly so the extra payment would be included each year. We also have money going into our escrow account to pay our taxes and homeowners insurance. I am confused. --Lynette more...

Mortgage payoff surprise

By Benny Kass, Monday, February 16, 2009.

DEAR BENNY: In a recent column, you listed what should be done when a mortgage is paid in full. My mortgage was paid in full in August 2008. I have all the paperwork and have done everything you suggested except for the original promissory note and deed of trust. I called my mortgage company yesterday and asked to have the original promissory note returned to me marked "paid and canceled," and their response was that they had sent me everything I needed. more...

Fearing default, reverse mortgage a last resort
By Benny Kass, Monday, February 9, 2009.

DEAR BENNY: My mother has a mortgage for about $26,000. Her home is worth considerably more (how much I'm not sure), but given today's housing market the value has probably declined. I do know that the terms of the loan are such that she's paying only the interest monthly -- she's not paying down the principal.

If she defaults on the loan, can the bank compel her to sell her home? Would they be entitled to the $26,000 plus fees? And if so, any idea what those fees would be?

What options does she have regarding a different loan or repayment schedule? more...

Landlocked property a nightmare to sell
By Benny Kass, Monday, February 2, 2009.

DEAR BENNY: My stepfather bought a piece of property many years ago, and he and my mother have been using a road that goes through a big field to exit their property for the last 15 years. My stepfather's first wife got a right-of-way, but it was never filed in the courthouse. Now my mother and stepfather need to sell the property (which is landlocked without this right-of-way) and the neighbors won't agree. My parents live on Social Security and barely have money to buy food and pay insurance costs. more...

Funding parents' reverse mortgage a win-win
By Benny Kass, Monday, January 26, 2009.

DEAR BENNY: I want to help my older parents so they can have a more stress-free and comfortable retirement, and believe I am in a position to do so. They have a home in an area where housing prices are actually still increasing, which makes the scenario even more attractive to my husband and me.

Their home is valued at about $250,000. They have an interest-only mortgage with a balance of $115,000. I would like to give them a personally financed reverse mortgage of $115,000 to pay off this first mortgage. more...

Lender can't nix loan on inherited home
By Benny Kass, Monday, January 19, 2009.

DEAR BENNY: My father passed away in January 2008 and I have inherited his townhouse. He had an existing mortgage, and I am continuing to make the mortgage payments. I have not notified the mortgage company. I am unable to obtain financing for the home in my name at this time. I have already been turned down twice. Does state law allow me to assume this loan, or if the finance company finds out, can it pull the loan? I don't want to lose the house. There was a will (I was the personal representative and sole beneficiary) and I had an attorney prepare the deed, which has been recorded in my name. It was my father's wish that the house be mine upon his death. --R.N.

DEAR R.N.: Please relax. State law has nothing to do with this. Federal law -- called the Garn-St. Germain Depository Institutions Act of 1982 -- protects you. This law, among many other matters, specially addressed your issue. more...

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