My mother put the house that she lives in under my name when I was 19years old. I thought it was the right thing to do because I always obeyed my mother. A few years down the line the house was threaten for foreclosure so I filed bankruptcy to save the house for my mother. Now in 7yrs later in 2013 I get a noticed that once again my mother have not paid the mortgage in about 2years and it's threatened for foreclosure again. I have a family now and we cannot buy our home because of this house my mother lives in that's under my name. I don't know if to take over the house fix it up and keep it or take my name off of it or sell it as is. What is the best direction to go in this situation?? I haven't lived in the house in the past 8 years.
2 Answers from Attorneys
You are now realizing what a big mistake you and your mother made in deeding the house over to you, as it has negatively impacted your credit. You didn't mention it, but it sounds like you may also be listed as a co-borrower in the mortgage. If the house is "underwater" in that you couldn't sell it for enough to pay off the mortgage and all the additional costs that have been incurred because of the default, you might see if the lender is interested in a deed in lieu of foreclosure, where they take the property back and forgive the mortgage. Of course, this leaves the issue of housing for your mother. Even if the lender is amenable to this, it will still have a negative impact on your credit score, although it may already be low because of the bankruptcy. If you aren't a borrower on the mortgage, you could simply deed your interest back to your mother, but that obviously doesn't resolve the problem for her.
You ought to consult with an attorney who specializes in this area, such as a bankruptcy attorney, or one who handles consumer finance, to see what course of action has the least impact on your credit. Your county bar association can probably refer you to someone who can offer you a consultation at minimal cost.
You don't specify is your mother is also a co-owner of your house, and whether you are obligated under the loan (did you sign the note?), or if you just signed the deed of trust (the item creating the lien on your house). You should take all the documents to a local lawyer to discuss your options for a short sale, deed in lieu of foreclosure, or simply giving the property up. But it seems clear you can no longer bail out mom. She may well have to move.