What are my options on my mortgage/rent?

Question

I am renting a doublewide that my aunt bought 10 years ago. She just asked that we pay the mortgage and that would be it. She died a couple years ago and since then the mortage has skyrocketed! Apparently, the type of mortgage that she took was the type that goes up and down depending on various factors. The insurance is also high and together it's getting unaffordable. My cousins said there was nothing they could do with the mortgage because she didn't leave that in their hands and they don't want the place. What options, IF ANY, do we have? Someone actually suggested letting it get foreclosed and then buying it back from the bank. Is that an option? There is only 20,000 left on it. And if we did pay it off, what would that mean for us with it being in my aunt's name? There was never any type of lease or anything. I really need some advice because something has to be done soon. Please and thank you!!! 
Becki  :D

Jeff B. · Answer

The mortgage company isn't going to care that she has passed so long as someone is paying the monthly mortgage.  Also, once the name on the title changes, the mortgage company may demand payment in full.

As I said, it will have to go through probate before anything can be done with it.  This will likely take anywhere from 3 months to a year or more depending on if there are outstanding bills.  Since you said she passed a couple of years ago, you may be able to do a summary probate and get it done a little quicker.  I just went through a similar situation with my grandmother's place in Florida, so I've been there, done that.

But in the end, you still need to determine the value of the property and determine if it will end up being a good deal or if it will be better to head on down the road.

Jon Holdman · Answer

Unlikely you'll be able to do a short sale, if you mean that you want to buy the house using a short sale.  Lenders will usually only allow an unrelated party to buy a property via short sale.

You really must find out who actually owns this house.  What your aunt said is not legally binding.  But if another relative does own the house, and acknowledges that it was your aunt's intention that you own it then perhaps they will be willing to sign it over.  Especially if there is no equity.  We had a situation like this in our family, where they legal ownership of several tracts of land were inconsistent with what everyone know were our ancestors intentions.  In our case, parcels were owned by multiple people where there was a known intention that a specific person own each parcel.  A series of quit claim deeds were executed to transfer ownership to the correct person.  If you can find out who owns this you can then work with them to get ownership.

Only the owner of a property can sell by short sale.  You can't do that directly with the lender, because they don't own it.

Lots of people have paid mortgages for six years or longer yet owe more than their property is worth.  Many of them would love to just walk away and start fresh.  They have to take a hit on their credit, and the bank may come after them for the shortage.  If this place is worth less than what's owed, you should consider yourself lucky.  Yes, your mom paid for six years, but she gets to walk away without any hit on her credit or any deficiency judgment.

Someone owns it.  Find out who.  You've said nothing that makes me think its you or your mom.

Find out what its worth.  I assume you know what's owed on the mortgage.

You may have to pay for some legal assistance to sort this out.

Jon Holdman · Answer

It may be in your aunt's name, but since she's passed on, she no longer owns it.  Someone else does.  If she had a will, the will would have (or, should have) stated who got it.  If  not, state law would control how her estate is divided.  You need to speak with whoever was involved in wrapping up her affairs after her death and see if they know who owns it now.  Or, find out the lawyer that was involved.

Unless she gave it to you in her will, its very unlikely you own it.  You're paying a mortgage on a property someone else owns.  Even if you do now own it, or can get ownership, its still security for the mortgage.  You'll need to negotiate with the lender to do something to change the mortgage.  If its in your aunt's name, and you can't show the mortgage company something that shows you now own the property, they won't talk to you.

As others have suggested, you need to figure out what this is worth.   If you can buy a similar property down the road for half of the mortgage balance on this one, it may be time to just move on.

Jeff B. · Answer

Rebecca, you need to find out who really owns it (check the county auditor's website to see who currently owns it).  If it is still in your aunt's name, it will have to go through probate to have the title changed to whoever is named in the will or the state will have to determine the successor  (may also be a life estate, but you'll have to determine that).  Depending on where it is and it's value, it may be anywhere from 2500-6000 to go through probate.  Then, you'll have to work out a deal with the new owner.  The bank may have issues with it being sent through probate, but you'll have to check with them.

If you have to pay the additional cost of going through probate, it may put the value of your investment in the property too high and you may want to look at other options.

Jeff S. · Answer

Hi Rebecca,

Your situation is not enviable. First, find a broker that specializes in that type of MH and find its value. Second, it has to be in someones name. Someone inherited it. If your rental is a month to month it is not up to you to do anything. If the value is more than the loan, negotiate with the owner. If they don't want it, negotiate with the bank. In any case, don't pay more than it is worth. A short sale may be what is in order if you are interested.

If you can do better elsewhere give the owner notice and find a more affordable place.

Jeff B. · Answer

Rebecca, don't give up on it without doing your due diligence.  It may very well be worth the effort.

Rebecca Manley · Answer

The home is on a piece of land that is ALSO in my aunts name. We pay the taxes every year. I think I'm just gonna move because it would be to hard and expensive to figure out a way to stay here and keep it, easier just to move on like everyone is suggesting. Thanks for the advice! I appreciate it sooo much! :)

Jeff S. · Answer

One other thing. If there is no land ownership with the MH it is not real estate, it is personal property. This is an entirely different deal and none of the typical real estate concepts apply. MHs are reposessed, not foreclosed, and there aren't short sales like with a regular peice of real estate.

A reputable MH dealer would be where I would start if there is not land in the deal.

By the way, MHs aren't a particularly good investment. Only if your lifestyle would be better than renting, for less money, would it be worthwhile. Unfortunately, MH park owners can decide to kick out the MHs with a month notice and develop the land into whatever he chooses. A MH has to be worth in excess of moving costs to make it worth moving, but the bigger point is that this kind of expense would be financially fatal for many MH owners.

Rebecca Manley · Answer

Thanks for the advice.I appreciate it! :)

Rebecca Manley · Answer

I'll find out about a will but we were living here before she died and she said if we paid the mortgage, we could have it. It wasn't mentioned in her will, only her home in Ohio. And the mortage company knows that she has passed and talks to us about the mortgage and payment arrangements, etc. but they won't let us change anything.  My mom is trying to stay here because she's paid the mortgage for 6 years now. How would I go about a short sale? Should I just talk to a broker and see what they say?

What are my options on my mortgage/rent?

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