DEAR BOB: About two years ago, I foolishly co-signed a home loan for my 26-year-old son so he and his wife could buy a home. That proved to be a major mistake. About a year later, she divorced him. I don’t blame her. But that’s another story. He is a cross-country independent truck driver, often gone a week or two at a time. He earns very good money hauling specialized freight, even after paying the high fuel costs. It’s hard work, but he loves the adventure. He has more job load orders than he can handle, as he is very dependable. But my problem is he often “forgets” to pay his home mortgage. As a result, his late payments hurt my credit rating, which is down to only 610 FICO. I have already recorded a quit claim deed to get my name off the title to his house. How can I get my name off his mortgage? P.S. There should be a law against co-signing mortgages – Claudia H.
DEAR CLAUDIA: Until you can get your son to refinance his mortgage or sell the house, your name will always remain as a co-signer on that mortgage. The lender relied on your credit and promise to make the payments so there’s no way to be released from your obligation.
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Perhaps you should offer to be your son’s “financial manager.” That way you can make the monthly mortgage payments to be certain they are sent to the lender on time.
If you son is a dependable trucker with lots of work, surely you can work out an arrangement for him to deposit his checks or send them to you so the mortgage payments can be made on time.
HOME IN AN IRREVOCABLE TRUST CAN’T BE CHANGED
DEAR BOB: A few years ago, when I was having “marital problems,” I put most of my assets into an irrevocable trust. As expected, my wife divorced me. It was the best thing that ever happened to me. She got a major share of my assets, but I got rid of her. My problem is I put my home and some other assets into an irrevocable trust for my two adult children. Now I would like to sell the house and enjoy the profit. But my attorney says I can’t change the irrevocable trust. Is that true? – Morris W.
DEAR MORRIS: Probably. Depending on the terms of your irrevocable trust, it might be possible to cancel it if the trust beneficiaries agree and if you have not received any tax or other benefits. Perhaps you need a second opinion from another attorney who specializes in trusts.
HOMEOWNER SHARES APPRAISAL EXPERIENCE
DEAR BOB: I especially enjoyed your recent item about appraisals. When we tried to refinance our home a few months ago, the mortgage company sent out an obviously novice appraiser. As you suggested, my wife handed her detailed information on several homes we knew recently sold in our neighborhood. We expected an appraisal around $475,000. To our shock, the appraisal came in at only $365,000. When I protested and demanded to see a copy of the appraisal, the appraisal company owner hung up on me. But our mortgage broker then said he would pay for a second appraisal from a different appraisal company. The second appraiser was much more professional, welcomed our comparable home sales information, and the second appraisal was for a very acceptable $460,000. How can two licensed appraisers be $95,000 apart on the same house? – Richard T.
DEAR RICHARD: Appraisal is an art, not a science. Appraisals are the weakest link in the home mortgage business. I have no clue why that first appraisal was so far below the amount you and the second appraiser valued your home.
Unfortunately, bad appraisers often go the other way and over-appraise home market values, enabling fraudulent mortgage lending to occur.
Faulty appraisals were a major cause of the savings and loan industry collapse a few years ago. The reaction was state licensing of appraisers. I was a big supporter of appraiser licensing to improve competence.
But the current federal USPAP appraisal rules are so complicated it is impossible to fully understand them. When I hear about appraisal scams, I often wonder why good people want to be appraisers.
The new Robert Bruss special report, “Everything Homeowners Need to Know About the New $250,000 and $500,000 Home Sale Tax Exemption Rules,” is now available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.bobbruss.com. Questions for this column are welcome at either address.
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