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John Stoller
  • Sacramento, CA
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I need to make a decision about my mother's home, help!

John Stoller
  • Sacramento, CA
Posted May 18 2017, 21:07

Hello all,

I would greatly appreciate some help making a decision. My grandmother has a 3 bedroom, 2 bath, 2200 square foot home in the middle of nowhere, California. Town is called Llano for the curious, population 1200. The area is the High Desert and the town lacks even a gas station. It is the type of place you move to to disappear. Best I can tell, the market value if it were in good condition is $250,000, but the house needs a good amount of work, ~20,000 worth. Her mortgage is underwater at $270,000 ($110,000 as a deferred principal). She had an in-house modification done on the property resulting in a low payment of $800 which is ending soon--the interest rate was kept at 2% until May 2017. There is about 37 years left on the loan.

Due to her age (87), I had to move her out closer to services. The home was ~30 miles from a hospital, isolated on 3 acres. Now I have to decide what to do with the property. My initial thought was to do a short sale and get out of it. The bank didn't set a fair price on the short sale and the real estate agent suggested we go a deed in lieu of foreclosure instead. My mother's credit is shot as it is due to consumer debt, so I figured why not. I thought it was especially good since she would qualify with state and federal programs that would give her some money in relocation fees. Between 8 and $10,000.

Now I am thinking we may not want to do it. I am worried I am giving up on a decent property. In the area, similar homes rent for around $1500 a month. I imagine once the modification runs out, the mortgage will increase to about $1200, but we should also try to pay down the deferred principal as well. I live far away from this property (7 hour drive) so I would have to hire a property management company. 

What are everyone's thoughts? I still think the DIL of foreclosure is the best option as it gets her some money. Moreover, if I inherited this place tomorrow that's what I would do since managing it would be so difficult. But, let me know if you people have other thoughts!

Thanks!

- John

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