DEAR BOB: We are having great difficulty selling our rural house. It has been listed for sale about eight months with only one “Mickey mouse” offer. The buyer will obtain a 70 percent first mortgage, pay us a 5 percent down payment, and give us a 25 percent second mortgage. However, this is to be an unrecorded “silent second” mortgage. The Realtor says the idea is to make the mortgage company think the buyer is paying 30 percent cash down payment. He says it is done all the time, especially with “difficult” properties like ours. What is your advice about a silent second mortgage for us? –Vickie V.
DEAR VICKIE: An unrecorded silent second mortgage is a fraud on the mortgage lender. I know it goes on, but lenders rarely prosecute the borrower or seller.
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However, an unrecorded silent second mortgage is dangerous for you. If you don’t record it, and if the borrower doesn’t make the payments to you, you can’t foreclose to get the property back if your second mortgage hasn’t been recorded.
At the very least, you should record your silent second mortgage after a week or so. But you should be aware that before it gets recorded, your buyer might incur liens, which would have priority over your later-recorded second mortgage.
For example, your buyer might have a prior judgment lien, income tax lien, child support lien, or other possible liens, which could attach to the property. If you decide to proceed, please be aware of your high risk and do everything possible to minimize it. For details, please consult a local real estate attorney.
CAN A REVERSE MORTGAGE BE REFINANCED?
DEAR BOB: We obtained a senior citizen reverse mortgage in 2004. Recently, we received a letter from our mortgage company outlining why we should refinance to obtain greater reverse mortgage benefits. Is this possible? –Jopie C.
DEAR JOPIE: Yes. Reverse mortgages can be refinanced. Perhaps your home has greatly appreciated in market value. The reverse mortgage lending limits have increased substantially in the last two years, making today’s reverse mortgages more attractive than a few years ago.
If you have a need for increased funds, I suggest you inquire about the advantages of refinancing your reverse mortgage.
IF YOU HAVE DOUBTS, CHECK YOUR TITLE AT RECORDER’S OFFICE
DEAR BOB: I bought my house in 1960 and paid it off in 1980. I have a living trust in my name. My problem is for the last 18 months I have been receiving mail from Realtors addressed to a person I don’t know, asking if I want to sell my home. I phoned one Realtor to ask where he got her name. He said he got the name on the Internet. I called the county assessor and he told me not to worry as everything is in the name of my living trust. However, I seem to have misplaced my title insurance papers. Any advice? –Phillip V.
DEAR PHILLIP: If you are receiving your property tax bills in your name, you probably have nothing to be concerned about. However, when you are in the area of the county recorder of deeds office, stop in to double-check how the title to your home is held. Mistakes do happen. Or there could be a forgery in your chain of title.
I don’t mean to alarm you, but checking won’t do any harm. If you find there is a title problem, contact your owner’s title insurance policy insurer. Your title policy is valid as long as you or your heirs own your property.
The new Robert Bruss special report,”Pros and Cons of Today’s Five Best Real Estate Profit Opportunities,” is now available for $5 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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