Posted by MikeC/TX on 12/3/12 4:23pm
Msg #445402

Another twist in the foreclosure mess

At first I thought this was going to be about reverse mortgages, but it's not.

http://tinyurl.com/c9cvzgr

Reply by rolomia on 12/3/12 4:53pm
Msg #445409

As long as American's continue putting up with this mess, it will only worsen. Unfortunately, history suggests that most citizens will sit idly by while their freedoms are stripped away until it becomes illegal to even question the accuracy of their mortgage. Imagine a scenario where an inquiry is, itself, considered mortgage fraud. Think it can't happen? With all of the ridiculous laws on the books, today, such a scenario isn't that far fetched.

Reply by BobtheElder on 12/3/12 5:01pm
Msg #445410

Not really a new twist... this is a simple matter of contract law, if it isn't in your name they can't usually talk to you about it. Might be fixable with a law allowing widows to sign on behalf of their late husband as an attorney in fact or something.... sad, but there are laws that say if you aren't on the note they can't talk to you about it.... maybe time for a few changes.

Reply by HisHughness on 12/3/12 5:04pm
Msg #445412

This problem is a problem only because ...

... the parties chose not to correct it beforehand. Put the wife on the mortgage, put her on the note, and there is no issue. This is not even a new wrinkle in mortgage mess; it has <always> been the case.

Reply by MikeC/TX on 12/3/12 5:44pm
Msg #445417

Re: This problem is a problem only because ...

I understand what both you and Bob are saying - it's not something new, but I think it's only now beginning to surface as a problem because of the high level of foreclosures and the increased scrutiny of the banking industry.

The issue is not really one of contract law or stupid decisions - the banks are willing to make the necessary changes to the mortgage and assign it to the surviving spouse. The problem is that they insist that the mortgage be current first, but many banks are refusing to accept payments from the surviving spouse that are intended to do just that.

This is your basic Catch-22 - you can't be on the mortgage until all payments are up to date, but you can't make those payments because you're not on the mortgage.

The article does point out that at least one bank (I think it was JP Morgan Chase) has figured out a way to get both things done at the same time. It shouldn't be all that difficult for the other banks to do the same thing.

Reply by MW/VA on 12/3/12 8:15pm
Msg #445428

Trying not to cross the line to JP, but if they take away

the mortgage interest deduction, I think there will be another housing crisis, with people abandoning their properties. IMO if someone has little or no equity left or is upside down and they would lose the tax benefits, then there's no incentive any longer to hold on. Just my .02

Reply by jba/fl on 12/3/12 8:39pm
Msg #445434

I disagree to a degree. I will depend upon a lot of things

though, not just a simplistic statement that would fit all.

I just found out recently that I am upside down, in practice. My neighborhood has had so many foreclosures and the appraisals are taking that into account, thereby lowering the entire area to 1/3 of what it used to be, even 1/4 of its former expectations. But, I have a very low interest loan, and could not find a rental for that amount (mortgage payment). With a foreclosure I would have a hard time to buy elsewhere, and if I did, would I be then having to upgrade everything to be where I am now? It would cost so much more in time and effort as well to start anew. Would I just be better off to wait it out for 10 years?

I think I will wait it out. There is a lot to consider. One size does not fit all.

Reply by MW/VA on 12/3/12 8:56pm
Msg #445436

I'm in about the same position, and that's why I've stayed

where I'm at.

Reply by desktopfull on 12/4/12 2:26am
Msg #445450

Owning is still cheaper than renting an apartment. n/m

Reply by Moneyman/TX on 12/4/12 6:17pm
Msg #445542

Re: This problem is a problem only because ...

I think the problem is, at least in large part, becoming an issue due to the aging population and may be compounded by the foreclosure rate.

Bob & Hugh are both correct. It is a matter of contract law and the way to resolve it, for most people, is to do what they have to do to change the situation prior to one party passing. Obviously, for some that advise comes too late.

If the lender can find a way to help ones in this situation, that's great, but on this one, you can't blame the lenders if the owners didn't do what they should have done to ensure that both of them were listed on the contracts.

I feel bad for them and really hope that they can get things worked out with the lenders if someone is in this situation, but with all the real things that banks/lenders can be blamed for there is no need to pile on falsely laid blame for something that is not their fault, imo.

I'm sure that for a lot of them in that situation, the original paperwork may have been signed so long ago that it never crossed their minds that it could even be an issue someday.

Reply by linda/ca on 12/3/12 9:06pm
Msg #445438

Re: This problem is a problem only because ...

You are so correct, Hugh. I saw so many borrower's during the mortgage modification boom with the wife not being put on the loan that it made me shake my head in disbelief. Most of them due to being "creative" in order to qualify and too many just because of culture, etc. The intent for most was to make the change after the new mortgage was in place, however, as I anticipated, it appears a lot of people never followed thru. I know it is not something people want to hear, however, you can't blame the banks for all the woes; maybe loan officers...lol, however most people, if not all knew exactly what they were doing. Unfortunately they did not bother to go through the process to make the necessary change.

Reply by JanetK_CA on 12/4/12 2:11am
Msg #445449

Re: This problem is a problem only because ...

I'm still seeing a fair number of those where the spouse isn't on the loan (and it isn't always the wife). How do you put someone else on a loan after the fact without refinancing? I would imagine it's not as simple as adding a name to title once the mortgage (or DOT) is recorded. Wouldn't there need to be a new Note signed to change who the "borrower"s are - and wouldn't that mean a new refi? I'm no LO, so I'm speculating, truly don't know.

I had a no-sign a few years back with a savvy wife who wanted to know what the consequences would be if her husband was no longer around. They called a lawyer friend (it was a Saturday afternoon) who told her that she might have to sell the house to pay off the loan, the bank might not accept payments from her, and I'm not sure what else. In the end, she refused to sign anything.

Most people think that not being on the Note is a good thing because it means they're not responsible for the payments, but they obviously don't consider all the consequences or aren't aware of them. Of course, it's not up to us to set them straight, but it's a good thing to know!

Reply by Linda_H/FL on 12/4/12 6:07am
Msg #445452

Many times the people need the financial rescue

of a lower interest rate or funds from the home but one owner's credit won't allow it without an exhorbitant interest rate. So the borrower with the best credit gets the loan, thus only one on the note.

Reply by MW/VA on 12/4/12 8:01am
Msg #445458

I see the issue here with not being on the loan, but IMO

no one is in a good negotiating position when you're behind on payments, regardless of any other status issues.