Posted by john on August 11, 2009 at 12:23:10:
A wiser man than me once told me, in reguards to loaning money ect., " I WANT TO BE THE S.O.B. NOW".His theory was that if someone he knew or was kin to wanted to borrow money,ect. he would not do it thereby being the S.O.B. now, as opposed to loaning the money,and being the S.O.B. later, when he wanted the money back.
Pre forclosure deal with family? - Posted by Kim
Posted by Kim on August 08, 2009 at 12:04:01:
About a year ago my brother and I inherited my dad’s house. 45 year old house, great condition, nice middle class neighborhood, New Hampshire, but soft market. Valued then at $240k - has been as high as $450k a few years back. My dad owned it free and clear when he died.
My brother is married with one child and they both have awful credit. He was allowed to get a loan of $60k on the house. I took this money along w/jewelery, furniture, some bonds, etc as my “half” of the house. They got the better deal of course, and I just went with it.
The house is now in he & his wife’s name. His wife just told me they are behind on their mortgage and their credit cards are maxed. Ridiculous, but not a big surprise since they are big spenders. (Would you go out for lobster if your mortgage was late??)
They also have a hard time keeping up with the house maintenance. Even a new hot water heater would be too much for them right now. She is hinted about borrowing money from us.
My biggest concern is my niece who will be 18 in six years. I’d like her to have the house, or at least put it in a trust for her once she’s old enough to be responsible. (Maybe never if she follows her parent’s foot steps.)
My combined income w/my husband is $110k/yr. We owe $75k on a house valued last month at $360k. We have no other debts (cars are paid). We have about $20k in liquid cash and other $ in 401K. We can afford to take over the low monthly payments, but should we?
I really hate to get involved but am afraid that my niece won’t have a house. My dad’s plan was to sell the house before he died and split the money with the grandchildren. (My kids’ share is in a trust fund)
Of course that never happened and I don’t want to see this house being thrown away. Ideally I’d like to see at least her college paid.
Any ideas are appreciated!!!
Re: Pre forclosure deal with family? - Posted by Kim
Posted by Kim on August 10, 2009 at 20:35:48:
Thank you all so much for your input.
I agree about the importance of estate planning!
I like the idea of credit counseling, however I do feel my brother has been very greedy in this whole situation. (One example is he was mad that I allowed Dad’s best friend to have his car even though Dad told us both that is what he wanted.)
Emotion has a lot do to with it, I grew up in that house and I don’t want to it being sold at auction or sitting vacant for years. But I need to let that emotion go; its just a house.
I have a lot to think about, but I’m leaning more towards staying out of it and putting other money away for my niece and/or allowing her to live with us.
Thanks again everyone for your ideas!
Re: Pre forclosure deal with family? - Posted by Tim
Posted by Tim on August 10, 2009 at 20:06:01:
I’ll be the blunt guy with no heart. Your first mistake was settling for less than half of the inheritance, don’t make a second one by bailing out people that are not fiscally responsible.
Re: Pre forclosure deal with family? - Posted by G.O.
Posted by G.O. on August 10, 2009 at 12:19:21:
What happens if you don’t get involved? Will they lose the house? Will they blame you for having to take this 60K loan? It’s always tricky when you mix money and family relationships. However, this may also be an opportunity for you to help them, and your niece, in the long run.
If you think you can afford their mortgage payment, or a portion of it (I think just a portion is better, this way you leave some responsibility for them) and it looks like your heart is set on helping them out, then what I would propose is this: you will pay a portion of their mortgage ONLY IF they get involved with some sort of financial counseling and get on the plan to straighten out their financial situation.
Judging by your comments there is a reason they cannot afford their mortgage payments. If you step up and pay it for them it won’t really change anything. They will run out of money again and may ask you to help with the maintenance on the house or something else. However, if you take on their financial obligations then you have the right to review their finances - banks always do, why should you be any different? And you, in a non-confrontational manner, may show them why they seem to have trouble with money. And if they agree to the counseling and to follow a financial plan to “recovery” then you will help them with their finances until they’re able to do it on their own again.
If they don’t agree, then you have to decide whether you’re willing to… well, throw your money away. Of course, I don’t know all the details, but this is how I see it and how I would approach this.
Good luck (and wisdom :)),
G.O.
Keep the issues separate - Posted by Chi Ming
Posted by Chi Ming on August 08, 2009 at 19:36:07:
The issue with the niece is different than the issue with her overspending parents. What you should do if they lose the house is allow the niece to move in with you if you really have that kind of relationship. Stay out of their mortgage issues as you cannot fix this and if at any time you pull back, you will be demonized forever more which may affect your relationship with the niece. If they ask for $$$, just tell them that times are tough and you’re worried about your own family as well. No specifics, just a general “everything’s bad” with the implication you could be next.
Re: Pre forclosure deal with family? - Posted by Sailor
Posted by Sailor on August 08, 2009 at 18:57:57:
It’s especially difficult combining grief, family & finances, & the awful thing is that no matter what you do or not do, you w/be the bad guy forevermore.
This is not the 1st example of why each & every one of us needs to do some serious estate planning TODAY. It still won’t work out exactly the way we want, but we can avoid a lot of problems for our heirs.
Kim, the only way I would touch this situation is to buy out the brother, but would not close until he is totally out of the house. I’d take title in the name of a family trust, & you can maintain the property for the benefit of your niece. As part of my estate planning I purchased a rental for the educational benefit of my DGGDs. They w/have access to both income & equity as needed, but the property stays in the trust for the benefit of the remainder of the family once their educations are complete.
I wish you the best in your situation, & strongly recommend you have an attny handle the entire transaction, including your offer. My preference, however, would be that you set up a fund for your niece’s benefit, & take care of her separately, perhaps by buying a different property. It would probably be cheaper in the long run. You could do a short sale on your dad’s home, but your brother would have to understand it is not allowed for him to profit by that. If there is a strong attachment to the property you could still buy it @ auction. Remember, though, that it probably has MAJOR lack of maintenance issues. (I just got a rental back after less than a year & the home was all but destroyed.)
My final caveat is to carefully examine your motivations. Is there a tiny bit of greed, along w/the resentment, in the fact there is some equity that is likely going to be lost? If so, discard the feeling immediately, & go about living the rest of your life w/out this property.
Natalie is right about not being able to save folks who refuse to help themselves–
Tye
Re: Pre forclosure deal with family? - Posted by Natalie-VA
Posted by Natalie-VA on August 08, 2009 at 18:21:26:
I know you mean well, Kim, but you just can’t help people who won’t help themselves.
–Natalie
Re: Pre forclosure deal with family? - Posted by Ken
Posted by Ken on August 08, 2009 at 15:37:51:
Stay out of it and do not lend them any money or you will be the bad gut soon