Elderly parent signed loan docs for youngest child

[dlh055]

 
Mother and father signed loan docs for a mobile home in CA for one of their adult children.  "Verbal Promise was made" they ( would obtain there own loan within two years and thus relieving the parents of the financial responsibility.  That was seven years ago and there has been no effort to do so.  Father has passed away, the child quite speaking to anyone in the family over five years ago.  She makes the payments, however they are typically late 10 to 30 days with no prior notice.  Mother makes the payments so they are on time.  Arggg!  Mother doesn't want to leave me and my brother with this problem and absolutely does not want to pay off the loan and hand over the property to the loosers.  I have read about LLC, not so good with "due on sale" clause possibility.  Sure we could start eviction, but then mother would have to make mtg and park payments and this would wipe her savings out.  She doesn't care so much about foreclosure, but she is 80 with high blood pressure and I'm afraid she couldn't handle the stress of what that will bring.  We also live in another state, making the legal logistics more difficult.  Any suggestions aside from the obvious...

[Dave T]

Now that father has passed away, is mother sole owner of MH or is child also on the title?  Mother is very astute -- by keeping mortage payments current she is preserving her credit rating that the child would otherwise be destroying with chronic late payments.

Assumption here is that child is not on the loan, not on the title.  Child is making payments to mother and not directly to mortgage company.

If mother is sole owner, as well as the only living person named on the loan, then mother could sell the MH and perhaps resolve her problem.   Maybe mother could give child first opportunity to buy mother out, otherwise the MH goes on the market in 60 days.  Unless something is done to force child into action, situation will probabl never improve for mother.

Would this work for this situation?

Not sure how you intend to use an LLC, but LLC is not a solution for this problem.

[dlh055]

Your assumptions were all dead on.  My parents attorney, the one that did their Will suggested my brother and I put the property into an LLC after both parents are gone to protect our assets.  From what I have read this would not be the solution.  I did like your suggestion though about selling.  Did read about the ins-and-outs of selling an occupied property... with angry occupants.  My dream would be to find a "Bull-Dog" investor that would be willing to buy the property occupied for the loan amount only, (38K) and deal with the trash. 

I just finished reading the CA Dept of Consumer Affairs Overview of the eviction process.  It's a scary thing!  We have nothing in writing, no agreement, nothing.  I am assuming that the law would see them as month-to-month tenants.  I have no doubt that my sister has already read this document.

One of the park regulations is that no property can be rented.  Anyone living there must be named on the deed/title.  Of course they are not on the doc, however I wouldn't put it past them to have doctored a photo copy of it and provided to the management office.  Sure I can call and find out, but there is that catch 22.  It's really an ugly situation, they would dig their heals in, refuse to leave and not pay a dime for rent, utilities or mortgage.  (space rent and utilities are paid to the management office.)

[furnishedowner]

Have you consulted that attorney again about this new family problem?

What about Mom's other assets? Can she will the mobile home to the sister (with the debt on it) and other assets to you other children? Then everything can be settled equitably upon her demise.

Family problems really are the worst. Some of us too, have families with Black Sheep like your sister. It sounds like Mom is very aware of the problem and will cooperate with any fair plan.

Good luck solving this and let us know how it goes. But I do think you need legal advice. You'll pay for it now, or you'll pay later.

Furnishedowner

[dlh055]

Talked with an attorney last year, thought about eviction.  The MH can be Willed, but they would have to qualify for the loan or I would have to pay off the loan as the executor.  I will be darned if I am going to hand them the home free and clear after what they have done to our parents.  If there is a way to throw them out on there butts and flush the  that is what I will do.  Yes I am angry, my mom is 80 and doesn't need this.  I manage the property, but I might as well pound my head into a wall  .  I believe they know that they have us over a barrel and are just waiting for mom to pass.  That is what chaps my hide.   Mom says, I would rather pay for the eviction and throw them out then give them the satisfaction of winning.  I must admit I agree with her. 

[Dave T]

Sounds like there are three courses of action.

• Keep making the payments.  Maintain status quo.  Give up any idea that mom will ever be repaid.  Consider the property a gift.
• Quit making the payments.  Let the property go to foreclosure.  Lender will take back property and evict if necessary.  Mother's credit score gets hit hard, and lender could pursue deficiency judgment.
• Sell property.  Keep making payments until property is sold.  Since park managment won't allow rental, child will be forced to buy the property or move.  I am guessing moving will be the choice.

Perhaps the threat of selling the property will force the parties to reconcile and get child back on track to being responsible.  Sometimes longshots do come in.

[dlh055]

Thank you for your wisdom.  The child is not going to change at age 47.  She is a lost cause.  I believe giving them 60 days and contacting the park management will do the trick.  What will be will be after that.

Thanks to all

[Dave T]

Talked with an attorney last year, thought about eviction.  The MH can be Willed, but they would have to qualify for the loan or I would have to pay off the loan as the executor. 

I believe they know that they have us over a barrel and are just waiting for mom to pass. 

What is it about death and inheritance that gives the child a free ride?  Mother has a will, right?  Does will give MH to child?  If so, will can be changed.  If will gives MH to you, then you kick the freeloaders out at your leisure.

Since you are the executor of your mother's estate, will the estate have sufficient liquidity to pay off the MH loan and all the other creditors your mother may have?  What if the MH has to be sold to pay off the MH debt?  Since debt has to be paid or lender will foreclose on mother's estate, selling MH may be only option if mom's estate does can not cover the loan payoff otherwise.

Remember, as a general rule, MH is  a depreciating asset.  Value goes down as time passes.  At some point, market value of MH may be less than what is owed on debt.

[Bluemoon06]

The due on sale clause allows the bank to call the loan due it does not require the bank to call the loan due.  Banks don’t want houses they want you to make your payments.  As long as what you are doing is not illegal and you keep paying the note the bank won’t cal the note.

I have houses that have had the name on the title changed 2 or 3 times. 

[mcwagner]

it's a mobile home.  probably not worth the mortgage owed.  easily trashed beyond reasonable repair by disgruntled tenants.

mom's how old?  good credit is probably not a big issue for her.  she's not going to be buying a new house; probably not a car.  credit cards are probably a non-issue.  make sure she already has sufficient life insurance.

let it foreclose.  let the bank deal with the miscreants.  if they're on title, then they take a hit, too.  problem solved.  mom can't sell it if they're on the title.  non on title?  sell it.  heck, give it away!  let someome else deal with the problem.

pursue an impoverishment strategy with mom.  gift/transfer assets as possible.  transfer assets to a trust.  whatever.  if she's poor, what's the bank going to get?  A ratty mobile home with pissed off tenants.

I'd quit worrying about preserving the "asset" or what the tenants may or may not do if they do or do not get angry, etc.    let them have the MH in the will.  who cares? 

cut losses and get out.  I know that's cold, but financially it may make the most sense.  The asset mom needs to preserve is her cash rather than continuing to give it to the tenants in the form of mortgage payments. 

[furnishedowner]

It sure seems like a good idea for Mom to sell the place. Daughter did not hold up her end of the deal to re-finance in two years.

Mom could get sick and need money. She does not need to be helping with mortgage payments for deadbeat child at her age.

Or Mom could just need to take a cruise and relieve some of the stress of dealing with that difficult family member.

Good for you two siblings who are helping your Mom with this. Call a Real Estate Broker in that town and get that property up for sale at a discounted price.  Book a cruise with Mom to celebrate when it's sold.

Furnishedowner

[dlh055]

Sounds wonderful to me 

Really everyone has been wonderful and mom and I thank you for all your suggestions.  Yes if mom gets ill we will have to liquidate all assets.    To the loosers... Adios, the ride has come to an end.  Exit to your left and don't forget to collect all your belongings.  Have a nice life and don't ever contact any of us again.  Ouch!   

I believe I have a handle now on how to roll with this.  Feeling much better now.  Sincerely