Expert: Dick Dennis - 12/14/2007

Question
QUESTION: Hi...I was wondering why most lenders don't want to help refinance people when they are in the foreclosure process?  I am currently facing foreclosure and have tried to refinance.  My mom and dad have excellent credit and have offered to co-sign for us to get us out of this rut and no lenders have called us back.  Is there a way my parents can buy my house from me and I still be on the title?

ANSWER: Lenders are in some hot water right now with all the shenanagans they've been playing with borrowers recently. So, now they have to make sure they cross all the tees and dot all the eyes. There are mortgage brokers around (the banks won't do it) who will probably do a loan for you either with or without your parents.

However, if I was standing in front of your parents right now, I would caution them NOT TO co-sign on a mortgage with you or anybody else. They can buy the house and get a loan. After the closing, they can add you onto the title if that is what you and they want.

I have a question for you: if you have not been able to make the mortgage payments thus far, Chad, what makes you believe you can do it AFTER they take title and get a new loan? You may put your parents in danger of having wrecked credit if you find you cannot be on time with the new payments. Do you really want to use your parents as a crutch to make sure the payments are made?

Your parents would be better off if you just move out of your foreclosed house, rent a different one (there are many people in your shoes right now) and rebuild up your credit so that some time in the future you'll be able to buy your own house once again. I do wish you well.

Dick Dennis

---------- FOLLOW-UP ----------

QUESTION: Thank you for your response.  As for your question... We have fallen behind because I have excepted a promotion from my job but had to take a pay cut for the training.  Now I am back to my regular pay with an increase in my pay too!  My mortgage loan right now is on an arm and it is increasing bi-monthly at this point.  If the increase in my mortgage payments keep going up at this rate I most definitely will have to move.  I don't want to rely on my parents, but I feel that is my only option to get on a fixed rate mortgage.  I don't want to have to relocate my 4 sons and my wife, but I do realize that may be our only option.  Do you know anyone I could talk to in Minnesota that could help us with selling my house to my parents?  At least discuss some options we may have.  Thanks again for all your help!

Answer
I suggest you ask around. Ask several mortgage brokers if what the president said in their new program to freeze the ARM loans, if they apply to your situation. I don't think so. It is said it would apply only to those who have ARMs but are not behind in payments. Just don't let your parents co-sign on anything. There's gotta be a real estate attorney somewhere in Minnesota who could give you some advice that would help you out of your mess. I do not know of anyone, but if you ask around I am sure you will find a knowledgeable attorney. Just be careful. Believe it or not, most attorneys don't know any more than you about real estate.

Dick