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Real Estate Matters: Financial Questions and Answers - September 12, 2009
By Ilyce Glink
Q: I refinanced my
I simply can't afford the payments, which seem to increase each year. Is my
A: You're in a tough spot, one shared by hundreds of thousands of other homeowners.
The good news is that in many states, lenders can't go after you for the deficiency -- that is, the difference between what the bank gets from the sale of your home and what you owe on the debt.
While in other states, the lender may have the right to sue the borrower for the difference by obtaining a deficiency judgment, many lenders have not gone down that path.
There are just so many homes going through foreclosure and short sale that lenders are eating their losses. Most states have a process that the lender must go through to get a deficiency judgment from a borrower. But the lender has already lost money as a result of the mortgage and the subsequent foreclosure of the home, and as a result many lenders are reluctant to spend more money trying to go after the borrower for the deficiency.
If you decide to sell the home through a short sale -- that is where you sell the home for less than what you owe the lender and the lender agrees to the sale -- the lender will have you sign some documents agreeing to the short sale. One of those documents may require you agree to repay the amount you are short.
Most borrowers are refusing to agree to repay the difference owed the lender, and many lenders are backing down from that requirement. Lenders would prefer to have the borrower sell the home through a valid short sale than foreclose on the home and sell the home in a foreclosure sale.
You may imagine the lenders believe they'll get more in a foreclosure (because they're taking so long to process short sales and seem uncooperative when dealing with short sale sellers).
But the truth is, lenders today get much more money when the borrower goes through the short sale process than through foreclosure. In some cases lenders only get
While a lender may have the legal right to go after your assets, including your home in
Please talk to a real estate attorney for details.
Q: Am I responsible for my deceased husband's mortgage? My name was not on the mortgage when he died. Can the mortgage company hold me responsible for this debt?
A: My condolences on the loss of your spouse. It's unlikely that the mortgage lender can hold you responsible for the debt. Your deceased husband's estate is responsible for the debt on the house. If his estate has assets to pay off the debt, the estate may have the obligation to settle those debts.
However, if the estate fails to make those payments and you fail to make the payments on the mortgage to the home, the bank might have the right to foreclose on the house and sell it to pay off the mortgage debt that is owed.
If you want to keep the house, you will have to continue to make the payments on the mortgage. You don't get to keep the house without making the payments on the amount owed on the mortgage.
As long as the payments are made on the mortgage, you should be safe in keeping the home. You won't be personally responsible for the debt on the home, but you should make sure that the insurance on the home is current, the real estate taxes are paid promptly, and you make the monthly mortgage payment.
Consult with a real estate or estate attorney for details on your obligations.
Q: Can a buyer get out of the having the buyer's agent represent her after the contract is signed? The buyer's agent failed to look out for the buyer's interest and did illegal things.
A: That's an interesting question. I wish I had some additional information from you so that I could better understand what your agent did to make you so mad you're talking about cutting out the buyer's agent's portion of the commission.
In general, your agent's misdeeds would have to be extreme for you to be able to get her share of the commission reduced or eliminated. Besides, the buyer's broker's commission is paid by the seller and if the buyer's agent was eliminated, the seller would probably still have to pay the full commission to the listing broker.
At the very bottom line, your buyer's agent apparently did what was required of her to earn the commission -- she helped you find a property and assisted in writing a contract that was accepted by the seller.
You'll need to speak with a real estate attorney who can look at your documents, and discuss whether the agent's behavior rises above bad to illegal. You should also discuss the agent and her misdeeds with the managing broker of the firm. But before you do that, a conversation with an attorney will be helpful.
Ultimately, it may not be up to you to decide whether your real estate agent is entitled to the commission. If your agent broke a law, you may have a right to report that action to the proper authorities (the office that regulates real estate agents in your state or the police).
Keep in mind that some buyers and sellers may think that their real estate agent has not performed up to par in a transaction, but their failure to adhere to the highest standards of their profession may not rise to the level of a crime or even merit discipline for their actions.
A real estate agent's best source of clients is referrals, and if you did not like the service you received, you shouldn't refer business to that person.
Q: We've been looking at a new townhouse development for almost a year. Now the bank owns the development with the remaining unsold units. We keep going back, so I think my wife really likes it.
What do I need to know about this kind of property and what resources are there to help us be prepared if we decide to buy? How flexible is the lender in this situation?
The community we're interested in is new community and not fully developed yet.
A: The questions you need to answer center on what the property's actual value is, whether the appraiser can prove their value to a lender and whether the community that currently exists is sufficiently developed for you to move into that townhouse.
The biggest issue to consider is what these townhouses are worth. Have any other townhouses sold in the community? How recently have they sold? Can you establish value with other townhouses in similar developments nearby?
If the property won't appraise out in value, you won't be able to buy it. If the community is new and not fully developed yet, you're taking a big risk. I'd find out a lot more about the value of the property (and what values homes there are appraising for these days) before making an offer.
You also run the risk that portions of the community might not get built or developed for many years to come. Are you willing to live in a partially finished community for five or 10 years? Will you be able to sell to someone else if nothing more is done to the development?
Buying in a partially completed development has inherent risks and you could regret having made the purchase unless you understand those risks and know what you are getting into.
Make sure you find a real estate agent to assist you who has worked regularly in this area and with property of this size and price during the last five to 10 years.
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Ilyce R. Glink's latest ebooks are "Save Your House From Foreclosure" and "The Clutter Collector: How to Get Rid of Clutter Everywhere In Your House," which are available at her Web site, www.thinkglink.com. If you have questions, you can call her radio show toll-free (800-972-8255) any Sunday, from 11 am-1 pm EST. You can also write to Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022
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