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Will inherit STRANGE house - allow foreclosure?

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raymondhow

Junior Member
What is the name of your state? PA

My mom and stepdad own what I call their "mystery house". It's a large old recreational building which they partly converted into a home, the result being a one-bedroom apartment with the world's largest unfinished closet (which is packed with a lifetime of stuff). The building is rather ugly but physically sound. The property is nearly an acre, and nicely located on a small lake near the Poconos. My parents are both currently incapacitated, my mom being in the hospital and stepdad in a nursing home.

They owe $150,000 on the property, pretty much mortgaged to the hilt. Someday it will pass on to 5 children, and I'll be the executor. I'm not at all looking forward to liquidating their estate, as I live 2500 miles away in California, as do the other children. Making the property sellable would require mountains of time and effort.

It occured to me that allowing a foreclosure might be the least hassle for the family, although I'm unsure of the consequences. Could a foreclosure reflect badly on the credit ratings of the heirs? I'm sure I will speak to an attorney about all this someday, right now I'm just trying to explore the question.
 
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seniorjudge

Guest
raymondhow said:
What is the name of your state? PA

My mom and stepdad own what I call their "mystery house". It's a large old recreational building which they partly converted into a home, the result being a one-bedroom apartment with the world's largest unfinished closet (which is packed with a lifetime of stuff). The building is rather ugly but physically sound. The property is nearly an acre, and nicely located on a small lake near the Poconos. My parents are both currently incapacitated, my mom being in the hospital and stepdad in a nursing home.

They owe $150,000 on the property, pretty much mortgaged to the hilt. Someday it will pass on to 5 children, and I'll be the executor. I'm not at all looking forward to liquidating their estate, as I live 2500 miles away in California, as do the other children. Making the property sellable would require mountains of time and effort.

It occured to me that allowing a foreclosure might be the least hassle for the family, although I'm unsure of the consequences. Could a foreclosure reflect badly on the credit ratings of the heirs? I'm sure I will speak to an attorney about all this someday, right now I'm just trying to explore the question.

A foreclosure will reflect badly on the credit of the owner(s) who allowed the property to be foreclosed upon.

There is no such thing as unsellable property: when the time comes, hire a real estate agent in that area and advertise it as a tear-downer or major fixer-upper. You may be surprised at some of the offers you get.

Also, it sounds like someone could have (when the time comes) the largest tag sale in your commonwealth and make a ton of money.

Think like an entrepreneur and get something done or let someone else be the executor.

There are tons of people in that neighborhood who would be glad to help you (for the right price).
 

raymondhow

Junior Member
seniorjudge said:
A foreclosure will reflect badly on the credit of the owner(s) who allowed the property to be foreclosed upon.

There is no such thing as unsellable property: when the time comes, hire a real estate agent in that area and advertise it as a tear-downer or major fixer-upper. You may be surprised at some of the offers you get.

Also, it sounds like someone could have (when the time comes) the largest tag sale in your commonwealth and make a ton of money.

Think like an entrepreneur and get something done or let someone else be the executor.
Thanks for your comments. I have already spent much time/money/effort taking care of their affairs over the last several months. Nobody else in the family wants to come near the place.

When the time comes, I was planning a "barn sale" of some kind, but I'm wondering... instead of a foreclosure, maybe we could make a deal with the bank? They get the place and all the stuff to sell (or otherwise dispose of), and we escape with our credit ratings intact? Do banks ever go in for such deals?
RH
 

Dandy Don

Senior Member
What is the property worth? You need to find out how much equity they have in it (total amount of payments they have already made) to determine whether it would benefit you to continue paying the rest of the mortgage or perhaps asking for a sale that you might receive partial profit from.

DANDY DON IN OKLAHOMA ([email protected])
 

raymondhow

Junior Member
Dandy Don said:
What is the property worth? You need to find out how much equity they have in it (total amount of payments they have already made) to determine whether it would benefit you to continue paying the rest of the mortgage or perhaps asking for a sale that you might receive partial profit from.
Thanks Don. I just managed to get a Verification of Mortgage. It was made in 2003 for $170,000, 15 years at under 5%. They still owe about $153,000. As I said above, the building is highly eccentric, to say the least. It was basically my mom's project to build a home from a recreational building. They added septic, a well, plumbing, insulation, sheetrock, etc., but they only finished about 25% of the building, the rest of which is a huge cavernous closet filled with old furniture and mountains of packed-up boxes from their other households over the years (my stepdad was a job-shop contractor who worked all over the country).

Whenever I visit the place, I always wander around and scream for about 20 minutes, things like "Who on earth would WANT this mess??" And the only answer that comes to me: the bank might.

Okay, let's say I cleaned it up, and tried to sell it for $200,000. If it didn't sell quickly, the mortgage payments would be eating up the rest of the estate (probable life insurance proceeds). When that's gone, what's the alternative? Selling for $150,000? But if we cut off mortgage payments sooner and let it foreclose, seems we could save the rest of the estate.

Question: could the heirs "disclaim" interest in the property? I just discovered that term in a book...

Any comments welcome. Venting a bit helps.

RH
 

Warped

Member
I'm not a lawyer!

I think you may be jumping the gun on this. You said that the building is located on a small lake near the Poconos. Why don't you try to sell it as "a potential small resort or B&B on a freshwater lake in the Poconos with huge potential"? All things considered, your parents may have a treasure trove of antiques in there or it might be 100% junk.

Either way, an acre of lake front property should be fairly valuable. You could either chop the acre lot into 1/4 acre lots and sell each for a tidy profit or offer it to a developer. Why not remotely hire a realtor to go take a look at the place (no building access, let's keep honest people honest. :) ) and give you an idea of it's value both as it sits and as 1/4 or 1/8 acre lots for individual home sites?

I'd just hate to see you let a nice place go that could net you a profit.
 

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