Q–As an agent of 35 years, I was shocked at your recent answer about the home seller not having to sell to the buyer who offered the full asking price. That is correct, of course, because the buyer cannot force the seller to sell because the listing was not a contract with the buyer. But you should also have stated that the listing real estate agent is probably entitled to a full sales commission. When I list a home for sale at an agreed price, the seller does not have to accept anything less than the full price. I can’t force the seller to accept such an offer, but he will owe me a full sales commission if he doesn’t. Why don’t you clarify that with your readers?
A–As I recall the question, the prospective home buyer asked if she can force the seller to accept her full price purchase offer. We agree the answer is no because the seller and buyer were not parties to the listing contract.
Shame on me for not adding that if the buyer’s offer was for the full asking price with no contingencies, and the seller rejects it, the listing agent is entitled to a full sales commission. The agent fulfilled the listing agreement by obtaining a full price cash offer. Thanks for keeping me on my toes.
Q–My wife and I want to buy a modest house for our family. We don’t speak or write English very well (although we have both become U.S. citizens during the last year), so we relied on our realty agent to help us. She found a home we liked and prepared our purchase offer. We made a $2,500 earnest money deposit with our offer. The seller accepted. But our realty agent can’t find us a mortgage. I am a gardener and the mortgage companies don’t believe I earn enough to make mortgage payments. However, for the last eight years we have paid more monthly rent than our mortgage payment will cost us. Also, we have enough for a 10 percent down payment. Our seller is mad at us because we can’t get a mortgage. I don’t blame her. Can we at least get our $2,500 back?
A–You are the type of home buyer Fannie Mae (Federal National Mortgage Corp.) and other major mortgage lenders want for their special home loan programs. I am surprised your realty agent couldn’t arrange a mortgage using alternative verifications, such as rent receipts and utility payments. To be put in touch with a local Fannie Mae mortgage lender, please call 800-732-6643. One way or another, you can finance that home purchase.
Q–Our home is worth about $220,000. The mortgage is paid down to around $87,000. We want to refinance to reduce our interest rate and get some cash so we can add a family room, but a friend told us we will owe tax on the money we receive. Is this true?
A–No. Your friend is mistaken. Mortgage refinance money is not taxable. There is a very good reason: You must pay it back. It would hardly be fair to tax you on money that must be repaid.
Q–I own an apartment building. It has a very small studio apartment, which is hard to rent and has been vacant almost three months. Can I deduct my lost rent on my income tax returns?
A–No. Lost rent due to vacancy is not tax deductible as a business expense.
Q–Why are vacation timeshares so difficult to resell? Since my husband died, I am sole owner of several timeshares. Should I add my daughter’s name as a co-owner? Are there any hidden difficulties if I give these timeshares to a charity as an outright donation or should I get a tax deduction?
A–Vacation timeshares can and are resold every day. But they usually are sold for far less than the original sales price. If you want to get rid of your timeshares, I can’t see any reason why you should complicate matters by adding your daughter’s name to the title.
Most charities will not accept a timeshare donation because of the payment obligations until the charity can get rid of the timeshare. However, if you can find a charity that will accept a timeshare donation, then you are entitled to a tax deduction for the fair market value of the timeshare. Please consult your tax adviser for details.
Q–I have been trying for several months to get Fleet Mortgage Co. to cancel the PMI (private mortgage insurance) on my FHA loan. They say it can’t be canceled, but I don’t believe it. I thought you said all PMI can be canceled after the 80 percent loan-to-value ratio is reached. I am 70 years old and do not need this hassle. Can you write a letter for me to Fleet Mortgage to get them to cancel my PMI?
A–No. At the risk of repeating myself for the zillionth time, FHA mortgages do not have PMI. Instead, they have MMI (mutual mortgage insurance), which is completely different from PMI.
I see from the excellent Fleet loan statement you enclosed, your FHA home loan has a low 7 percent interest rate and the FHA MMI insurance costs you only $3.46 per month. You have a great loan.
Although FHA says its MMI insurance can be canceled if the lender agrees, I have never yet heard of an FHA lender canceling MMI. Frankly, considering your small $3.46 MMI monthly charge, it’s not worth your time arguing with your loan servicer.
Q–I am divorced. My ex-husband remains in the family home and I want out of the mortgage. My plan was to quit claim my half of the house and have him refinance to get me out of the mortgage obligation. This was agreed to in our marital settlement. But there is no equity in the house due to its decline in market value. All I want is to get off the mortgage. What is my recourse?
A–If there is no equity in the house, it is virtually impossible to refinance. A few lenders are advertising 100 percent and even 125 percent mortgages, but the loan fees and interest rates are very high. I doubt your ex-husband can be forced to refinance on such high-cost terms.
My suggestion is to write to the mortgage lender, explain the situation, and ask what you can do to get your name off the mortgage.
Q–We have just gone through a mortgage refinance. To our amazement, we found the lender’s “garbage fees” far higher than expected. We had to buy new title insurance for $510.02; pay a tax service fee of $80 and a document preparation fee and processing fee of $400; plus pay for “recon tracking,” endorsements, Federal Express, fax fee and demand fees. The total costs came to $4,448.56 for this simple refinance. Can we get any of this money refunded?
A–Shortly after you filled out your loan application, you should have received the lender’s good faith estimate of costs. If these charges were not itemized on that disclosure, you have valid grounds for refunds of any undisclosed charges.
You are correct that the lender charged unnecessary “garbage fees” such as the document preparation and processing charges. But the lender’s title insurance is normal for a refinance. The tax service fee of $80, to inform the lender if you don’t pay your property taxes, is very high.
Some of the other charges are questionable, too. Go back to your lender and demand refund of any fees that were not initially disclosed to you. If you don’t receive a refund, Small Claims Court is the appropriate place to sue your lender and let the judge decide.
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PLEASE NOTE: Real estate laws vary from place to place. You should check the laws of your state, county and municipality before making decisions on real estate issues.
Write to Robert Bruss at 251 Park Road, Burlingame, Calif. 94010.
