All Forum Posts by: Richard Singh

Thanks, any advice on the other points? 

Okay that’s good to know. I presume you mean that deed is good enough?

Yes, she actually recently received a letter from a company that purchased the Heloc. We’re working with them on options currently. 
 

Hey all,

I've been going through the forum trying to figure out a few options around my mother's current mortgage situation. Was hoping you guys could shed some wisdom and experience on this. To note, I will be discussing this with a CPA and Lawyer, but wanted to understand my options beforehand.

In April, my father passed from COVID and set us down a path of restructuring our lives, and more importantly my mother's. He was the bread winner and my mom decided to take his social security earlier as the numbers didn't work out that much better for her to wait to get the full amount. It's still a solid amount, just over $2k/month, but of course this creates another issue. She was not able to assume the mortgage because she didn't qualify. To sprinkle in some complexity, they are $40k behind on their mortgage, with principal deferred and majority of that amount in interest, taxes, and insurance for over 2 years. She was told to let the loan go in default for a period of time to hopefully get the loan modified, but because it was modified before apparently that's not an option as per lender.

So here we are, and I'd like to clean this up immediately. The mortgage company said if we paid the $40k and brought it current, they would reinstate the mortgage, however she would not be able to assume the mortgage. She's on the deed and that sorts out ownership, but still not a completely ideal situation. We started receiving Intent to foreclose notices along with letter stating she cannot assume mortgage, so seems like we've exhausted all options here besides reinstating loan.

Here is what I've been thinking of, and would love to get your feedback:

Property Details and Important Details:

2 Family, 1 unit rented for $1500 (under market by $500), Mother is in other unit 
- Both units can rent for $1900-$2100/mo easily. We've never had issues with finding tenants.
- Property tax: $15.5k!

About Me:

I recently purchased a 2 family owner occupied in August 2020
I make sufficient income to cover this mortgage also, my DTI is below 15% with existing mortgage.

About Home:

Appraised Value: 415k
Owed: 233k
Balance due: 40k
Previous HELOC: 40k (sold to another company, but I'm assuming the lien still exists)
APR: 3.5%

Goal:

- Clean up this situation for least money out of pocket
- Renting both units so the property is covered and possibly cashflows
- Come out of pocket with least cash, and pull any equity possible to achieve above.

1. Paying off $40K for my mother while adding me to the deed. Approaching mortgage company to get our names on the mortgage. Be in a position to do a HELOC and reclaim the $40k and cover previous HELOC possibly? Goal here is to clean this up, and pull some equity out that could help us focus on upgrading property to rent both units along with some costs associated with relocating her. Would love to work directly with lender to keep it as smooth as possible, but not sure if that could be the case.

Few notes for those who are are naturally cautious, my mother is completely onboard and I've been handling all of her affairs since then. She's not really motivated right now for obvious reasons, so have to take this over the finish line for her.

Thanks in advance!

@Derreck Wells

This is an older thread, but we went to HUD and realized it was renewed in March 2020.

@Derreck Wells

There was a lease and the tenant was not MtM.

@Darren Sager

Darren, this is exactly what I’m doing. If I’m going to get serious about investing, I cannot have points of failure. Thanks for the input.

@Darren Sager We actually had to retrieve the lease from the housing authority after claiming to have authority to do so. If I knew it was that easy, I would've done it myself earlier. Really unfortunate, even if $3k is not a large sum of money in comparison - it's still a chain of trust that has been broken. The conditions and nature of the property are now in question - as you think - what else are they hiding or overlooking.

@Patti Robertson Amazing, thank you for this. I forwarded this over to my lawyer with a snarky email, asking why am I getting better advice for free than from my paid representation. Appreciate it.

@John M Chludzinski So this was my misunderstanding coming from the agent was that the lease was MTM, not knowing that was not a thing. The premise was false from the get go. My question to you is, if I plan to owner occupy in February, is that a valid reason for not renewing the lease?

@Nickalaus A Goodman 

We haven't closed as yet, and prior to closing the mortgage company requested a lease - which we asked numerous times for from the seller's lawyer and realtor (which is also the broker where my realtor hangs his sign). They repeatedly sent Section 8 HAP Voucher and no lease, no one alerted me that this was not the right lease. I assumed that since my lawyer and realtor didn't signal that there was an issue - that maybe this was how it was. They actually said "Tenant is on MtM, there is no lease). 

Just a few days ago my lender requested the lease again before getting clearance to close. The Seller's attorney then  mentioned that there would be a lease at the Housing Authority. Lo and behold - when I thought I was getting an active lease - I received an active lease ending 2/2020.

I wouldn't say it's a deal breaker, but I would like them to make this right. I've seen suggestions about E&O insurance and getting the broker and seller to split it - so I've presented it open ended to let them figure it out.

I also do not think they discussed Security Deposit - which I hope not to be another serious hiccup. This was a lawyer referral - but next time I'll take my chances with my own vetting.

@Laticia Braxton That's so odd - and I respect the fact you came out of pocket. I am very much like that in the way I do business also - but tend to feel like the sucker in the end in circumstances like this where I knew I should've taken the wheel and got it done right. It's really unfathomable for an Agent to make this kind of money without doing right by their client, but the buyer/seller under one shop certainly heightens the stakes for them. For the lawyer fee I am paying also, there are no excuses - most of the work is done by admin staff - I've spoken to him a total of 20 minutes - I consider myself an easy client.

Appreciate the advice and support. I'm considering my next move - closing should be this week.