Anyone experienced out there who knows this answer?

Question

Hey guys,

I know one of you out there will have a good idea here...

So my father owns a property in California (Los Angeles) that currently has a market value of ~$820K. He bought it back in 2006 for about $500K. Since he made interest-only payments, that is still the amount owed.

He recently filed for bankruptcy and the home is in a foreclosure motion.

Does the following idea make any sense?

- I add myself to the home title

- Refinance for a $500K loan to pay off the amount owed by my father and bring home out of foreclosure (there will be at least 20% equity in the home)

- Then either sell the house for market value or rent it for a few hundred bucks cash flowSo my questions are:

1. Is this possible>?

2. Are there any legal implications?

3. Will it mess up my credit?

4. Should I pay off the past-due amount to bring it out of the foreclosure motion, or wait until the refi?

Any and all answers would help. Thanks everyone!

John Slater · Answer

@Greg Moskalenko

I don’t believe refi will work as being in foreclosure and filing bk isn’t a good risk for a new lender.

Adding yourself to title does nothing. No implications on you as the foreclosure is on the loan and your not on that. If recently filed bk, if it will sell quick you could list it and sell before bk finished. However, if you have money to bring it current, solve the foreclosure, then sell it obviously eases the burden of time. Bringing it current will mean less fees accruing.

If it were me, and I believed I had time, I would list it to sell.

Only other thing would be assuming bk 13 works and a payment plan $$ amount makes sense to pay in addition to mortgage payment, that would also solve the foreclosure but then he has bk on his record also.

Greg Moskalenko · Answer

@John Slater It was chapter 13 and yes, to slow down the foreclosure.

John Slater · Answer

@Greg Moskalenko did he file 7 or 13? Was the BK just to slow down the foreclosure?

Jerry Padilla · Answer

@Greg Moskalenko

I am not aware of any lenders that will allow a “bail out” situation.

Greg Moskalenko · Answer

Wayne, agreed. While we can remove the foreclosure motion, there is nothing that we can do for the bankruptcy situation for the time being. Is this a show-stopper you think?

Wayne Brooks · Answer

The BK will complicate things.