By EDITH LANK
Q: How do I find out about foreclosures without having to subscribe to a weekly/monthly service? What are the qualifications (earnings as well as price range of the house) to get a Fannie Mae or Freddie Mac loan on one of their foreclosed properties? — email
A: Law offices handling foreclosures advertise them publicly in local newspapers. You can look for them in the classified ads.
Fannie Mae and Freddie Mac don’t make individual mortgage loans. They’re part of what is known as the secondary mortgage market. They invest in large packages of existing mortgages, which they buy from banks and other lending institutions. By the way, regular mortgage lenders are currently requiring pretty large down payments on investment property.
To buy property at a foreclosure auction, you must be prepared to make an immediate deposit and pay all cash promptly. Experienced foreclosure investors often have a line of credit ready and waiting before bidding. Many real estate brokers are qualified to handle foreclosures owned by the Federal Housing Administration and the Veterans Affairs. Those are sold through a different system with financing available.
A lawyer who specializes in real estate can explain local procedures and guide you through your first transaction.
More time share woes
Q: In 2007, I gave a warranty deed on my time share to a company called __. It appears they did not record the deed. I thought they were the owners, so I sent all the bills to them. But they have not paid the dues.
The time-share organization doesn’t accept this deed because it was not recorded. They are requesting payment from me. Do I still own this property? Am I responsible for the dues owed? They may be out of business. — J.S.
A: It’s more likely they’re operating elsewhere under another name. I wonder how much you paid them to “take that time share off your hands”?
If a deed has been properly signed and then delivered to the new owner who accepts the document, then ownership has been transferred, even if the deed was not recorded.
That’s all I know. It’s possible that you are not the owner, but I can’t tell from here. Talk it all over with a lawyer.
Doctor in the house
Q: Our son has a house in another state, and I am sure it’s underwater. He will finish a residency and has to relocate, so he will need to get out from under his house. Instead of walking away, he would prefer to sell for the best price possible. And if the home’s less than what he owes, as I understand, this would be a short sale. His student loans will be due soon, so money flow may be an issue.
The questions are: What arrangements can be made with the bank on a short sale? Will the bank take the proceeds and call it even? If he walks away, does this require a quitclaim deed and how much will this affect his credit? Are taxes owed on any difference (debt forgiveness)?
It is an old house and will deteriorate quickly if vacant, so the best option for everyone is to get it sold. Anything you can tell us about a short sale or other options will be appreciated. — C.L.
A: With a short sale, the lender will take whatever your son could get for the house and (usually) cancels the rest of the debt. This is possible only if the lender agrees to it ahead of time. They usually require proof that the homeowner is just about penniless with no other resources. For short sales, the IRS is currently lifting its taxes on debt forgiveness.
Walking away involves just walking away. But it will trash your son’s credit rating.
I’d suggest consulting a HUD-certified housing counselor. At the website hud.gov, your son can click on “Talk to a Housing Counselor” to be referred to a local nonprofit agency. If anything is open to him, they’ll know about it.
Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope). Or readers may contact her at askedith.com or email@example.com.