Q–After a terrible divorce, I recently refinanced my home loan. When the loan agent came to my home with the papers, I noticed that instead of the $71,000 I agreed to refinance, there was an $81,000 figure.
The property taxes and insurance were to be included in my monthly payment of $567.70 at 7.5 percent interest. No other mortgage broker could beat that loan. But when I got the final papers and the checks, $81,000 was the amount to be paid off.
The mortgage broker’s attitude was that I had signed the papers, so he couldn’t change anything. Now I find out my property taxes and insurance are not included in my monthly payment. I want to recover that $10,000 the mortgage broker took after misleading me. I called the state license officials and they tell me the so-called mortgage broker is unlicensed. The loan has been sold to Norwest Mortgage. What should I do?
A–Take a look at your Truth in Lending Regulation Z disclosure form. Was it incorrect? If the disclosures were wrong, you have up to three years to rescind the loan for misrepresentation. The lender must then refund the interest paid, plus damages. However, if you signed that disclosure and it was correct, then you don’t have much recourse.
If the disclosure statement was incorrect, contact the loan servicer to rescind the loan for misrepresentation. You still owe the principal, of course, but not the interest. Please consult a local real estate attorney for details.
Q–We bought our home 18 years ago for cash. Some time ago I was watching a TV program about how homeowners can lose their homes. Of course, I understand that failure to pay property taxes can result in the loss of a home. Are there any other ways I might lose my home?
A–Stop worrying. Very rarely do people lose their homes. Of course, if you had a mortgage and failed to pay it, you could lose the house by foreclosure. But due process of law requires following specific procedures before a property can be forfeited.
For example, if you fail to pay your income taxes, the IRS can record an income tax lien. If you still don’t pay, after notice the IRS can seize your home and sell it. But even after an IRS seizure sale, you have a 180-day redemption period. Similarly, if a court judgment is recorded against you, after a trial, the judgment lien holder may be able to enforce it. But there are homestead protections and other safeguards in most states. You would know if something was happening that might result in loss of your home’s title.
Q–Last October I rented my house to a tenant on a one-year lease. Recently he gave me notice he plans to move out the first of next month and wants to use his security deposit to pay his last month’s rent. What recourse do I have to stop my tenant from doing this?
A–Since your tenant didn’t pay the current month’s rent on time, your legal remedy is to begin eviction for nonpayment of rent. Unfortunately, by the time your case gets to court, the tenant will have enjoyed about a month of “free rent.”
In most states, the tenant is responsible for rent under a lease until the property can be re-leased to another tenant. To hold your tenant liable for unpaid rent, plus any damages, consult a local real estate attorney who specializes in evictions.
Q–My husband has terminal cancer. His doctors give him about three months to live. In addition to worrying about him, I am very concerned about being unable to pay the taxes after he dies. We paid only $12,500 for our house many years ago. Today, it’s worth at least $300,000. After he passes on, I’m worried I can’t pay the taxes on his inheritance without selling the house. The house is our major asset. How can I avoid estate taxes?
A–You probably don’t have to worry about any federal estate taxes. If your husband’s will leaves his assets to you, under the marital exemption you won’t owe any federal estate taxes, regardless of the amount you inherit.
Equally important, you will get a new basis stepped-up to market value on the half of the house inherited from your husband. In community property states, a surviving spouse gets a new stepped-up basis on the home’s entire market value if it is community property. The result is to lower or eliminate capital gain tax when you eventually sell the house.
Now is the time to consult an estate planning attorney to avoid any unexpected complications. Be sure your will and your husband’s will are the way you both want. You may both wish to put your major assets into a living trust to avoid probate costs and delays.
Q–My mother and I were joint tenants on a property for eight years. She then gave me a deed to the property for her interest. I recorded it in February 1993. In December 1993, a deed showed up recorded giving the same title to my sister, dated earlier, but recorded later. My mother says my sister pressured her into signing papers but they were not to be recorded. Later, my mother transferred the title to me.
My sister recorded her deed as a wedge for other interests, but now she refuses to sign a quit claim deed. Due to my mother’s age, my attorney says we’ll have to go to litigation. What should we do?
A–What a title mess! A quiet title lawsuit brought by you against your sister and mother can determine who owns what. The judge will hear the evidence and then declare the ownership interests of the parties. Unless your sister will sign a quit claim deed to avoid litigation, I see no other alternative. Your attorney is correct.
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PLEASE NOTE: Real estate laws vary from place to place. Be sure to check the laws of your state and municipality before making decisions on real estate matters.
Write to Robert Bruss at Tribune Media Services, 435 N. Michigan Ave., Chicago, Ill. 60611.
