need help

4 Replies

I reside in Texas. Currently my brother is sentence to 4 yrs in jail 2012. Prior to him going to jail he had started a home modification with Wells Fargo on his home loan. I decided to move in the property to help him out and now I just made the 3rd modification payment today. He owes a lot of money on the home and need a lot of repairs. The loan preservation rep told me today that my brother has 3 liens on the home. IRS lien, child support lien and HOA lien. My questions are: Can I take the loan over in about 6 months? short sale etc with him being in jail that's when my credit would be good enough to apply for my 1st mortgage? Is there anything I can do the save this house with my brother being in jail to prevent foreclosure? I did sign a lease before he went to jail. The mortgage is 243,000 the mod payments are 1875.00. The mod rep said that they need to show letters that my brother is making deals with his liens holders but he is in jail. I would like to stay in the home. Any advise

Hey Joe,

You may look at a limited Power of Attorney, just for the real estate your brother owns, to try and track down some of this info for him. In my experience all lenders/government lien holders refuse to speak with anyone other than the owner or a POA holder as they have alot of privacy laws that regulate what they can and cannot discuss. The biggest question is whether the house, plus all of the liens, are still a worthwhile purchase price for you. The modification lender will not allow any kind of a short sale to a family member, so they have to get their money, and any new lender you deal with to finance your purchase will require the home to be lien free when you purchase it.

Sorry for the "bad" news :(

Hi Mike,

Thanks for the information, I got a copy of the lien today from the modification department and they removed everything that was holding up the modification. Now I'm just waiting on the permanent loan documentation. My next question, Can their be a discussion about a short sale with the bank to see what the lowest price they would except for the house. Because I can't keep paying 1800.00 on a home that is about 80k underwater and have a damaged pool, foundation issues, roofing and other repairs. I would like to purchase it 130k but it needs 30-40k of repairs needed to it. The HOA is really a worrisome about the repairs that need to be done. What should I do next? should I just walk away? Try and rent out? or Buy

Hi Joe,

Banks will not do a Short Sale unless it is an "arms length transaction" meaning that the buyer has no interest or connection in any way to the seller. This is to avoid fraud, as some folks in the past have sold homes to family members, or a spouse who wasn't originally on the loan and the bank took a loss. As an owner of a property that is technically "underwater" I understand the frustration, however at the end of the day I made a promise to repay, and it's not the banks fault I bought at the top of the market. It sounds like you have a much better connection with your lender than most. I would try and keep those lines of communication open, and explain to them the situation and see if they can do a more extensive modification, or possibly an outright re-finance. This won't help on principal reduction, however it will start over the amortization process and may gain a lower payment that is more doable.

Ultimately however, it may just be best to walk away. This sucks, but even if the bank did re-finance, you would be paying for a decade to get the principal down to a safe level, and shelling out cash up front to keep the property from falling apart, when you find another home currently for sale without these issues. If you do try and rent this home out, be careful if the home does go into the foreclosure process as many states (mine does) have laws that greatly benefit the renter, and provide protection for them.

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