Help? Unpaid Balloon + Modification? Nightmare? Dream? Refinance?

Question

Anyone got any ideas.  Trying to help a family.

Tampa Florida

March 20, 1998 a 50-year old and her husband (and mother?) get a private mortgage from a "friend" (daughters boyfriend) with friend's father and mother as mortgagees.

Homeowners put $10,000 down and get financing on $60,000 for 10 years at 10%. There is a $54,563.41 balloon payment on principle due April 1, 2008.

That balloon was never made. No late or missed payments by the owners since the mortgage.

may 5th, 2011, under threat of foreclosure son issues himself as mortgagee a forced 10 month simultaneous addon of $3,102.60 to the mortgage as a result of him redeeming property tax certificate. This basically was treble the amount of taxes due to attorneys etc.  Full due by March 1, 2012. This loan is stated as homeowner affirms it is "for commercial purposes only".

August 24, 2011 same thing happens...new mortgage added on with son as mortgagee for $5253.35 however for 18 months @ 10% full due by Feb 1. 2013. Also again affirmed as "for commercial purposes only"

All payments, always made on time.

The homeowner has been advised on several occasions by the mortgagee to not sell the house or refinance without speaking to them first.

The homeowner (husband and wife) are now 70+ years old.  The mother who was also on mortgage has passed.

2 years ago, the wife moved to another state to be cared for by daughter. Husband still lives in residence.

Homeowner asked for balance statement showing payments and amount due as she felt she should be close to pay-off.  Requests.were.ignored.for.almost.two.years.

2 months ago, mortgage holder sends paperwork with amortization schedule and loan modifications to homeowner.  Agreement says that homeowner has requested a loan modification due to not making balloon payment 10 years ago.  (they didn't)

Balance due is about $37,000.  Modification creates new 30 year mortgage for that amount at 10%.  In addition, the lender redeemed a certificate (before the homeowner had a chance) in 2015 in which he is demanding immediate payment (I am guessing he is going to do what happened last time if it is not immediately paid to him).

Homeowners also have not yet paid 2018 property tax which will go to auction as a certificate in may if they do not pay in time.

Guessing around 1800 sf, 4/2 single story block house -- lot is 50x129

County market value $140,701

county assessed value: $66,214

comp neighborhood value: $190,000 - $210,000

Low Fixed income.

No Cash

Checking for them, but likely low credit score. (no derogs just nothing positive reported either for decades :/)

4 living children, not with enough income/credit for co-sign

creative options?

Thanks in advance to all.

Theresa Harris · Answer

@Maurice Evans  If the homeowners (your in laws) can make the payments, are you and your spouse in a position to buy the note from the people holding their mortgage?  10% is a high interest rate and you'd think after 21 years, the balance would be close to being paid.  A $60K loan 21 years ago with $37K currently outstanding doesn't seem right.  Even if you got a HELOC on your home for $40K (giving the others some money to get out of the situation), you'd get a better interest rate than 10% and your in laws can pay back the loan including the interest.  A 5 year mortgage at 7% costs about $800 a month.

Maurice W. Evans · Answer

That is a consideration, I am having them check on how that might impact their medicare.  I think i would have to figure a way to buy the mortgage from a paperwork perspective.  If she sells that puts her into a possible issue with medicare.

They want to keep their house, I just feel they got raped a long time ago and are continuing to be so.  Looking for best approaches to get that lender out of the picture.  Hadn't considered the fraud possibilities until seeing some answers here. So I have a call into an attorney, but would like this to be as simple as possible.

Victor S. · Answer

so it appears no one in that family has financial means to refi. can you buy the place and rent to the current owner instead? (for whatever he is currently paying/comfortable with) there should not be any emotions involved, as there is no way he can afford those terms and neither can anyone in his immediate family.  you can sweeten the deal up with whatever cash amount makes sense here. unless, like Jay said, you're just trying to wholesale this to somebody else.

Jay Hinrichs · Answer

if the lender knows / or should know that the borrower lives there.. and they wrote a commercial purpose loan.

then i think you have a variety of issues.

1. owner occ loan needs a licensed RMLO to originate the loan.

2. and if 1 is true you may have a note thats not enforceable.. and could be that all payments made to date will go to principal only.

Not sure what your interest is here as a wholesaler are you just trying to wholesale the property and make a profit off of this.. or are you trying to help them out pro bono becasue your a great guy ?  if so U hire the attorney and pay them and see what you can do for these folks.. doubt they have the money for an attorney.

And if this lender does not have proper license what is FREE is to file a complaint in the state with whoever regulates Owner occ loans and lenders.. thats very easy.. its these type of situations that regulators will usually jump on.. and why we pay our tax dollars.

Saravanan Saravanan · Answer

@Maurice Evans

Hope the borrower paid with check and there are paper trails to show the payment history.  Wish this was done with title company and a third party note serviciing company was used from the very beginning.

It is better that take a licensed experienced real estate attorney who can solve this issue.  Either they can identify fraud with available documents and / or negotiate with the mortgage holder to resolve this.

Pat L. · Answer

You need a good REI attorney. Up here we are advised by our attorney that a balloon payment not acted on by the note holder per se becomes moot. You maybe in a much better negotiating position that you appreciate. Get advice ASAP.

Maurice W. Evans · Answer

good question.  Would rather not.

Maurice W. Evans · Answer

Thats possible...however, If I buy the note, then isn't that purchasing the house?  At her age medicare reimbursement is an issue with this.

Victor S. · Answer

I like Theresa's idea of you becoming their lender (as long as you're ready for that position, especially considering they are family). It might not be the right time, but given your FIL's age, who would take over the payments after his demise?

Help? Unpaid Balloon + Modification? Nightmare? Dream? Refinance?

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