Q: Due to illness and unemployment, we have fallen two months behind on our mortgage payments. My husband is now back at work and I’ve taken a part-time job to help with the bills.

After receiving several threatening letters and even a phone call, the mortgage company filed foreclosure about three weeks ago. They say we are three months behind in payments. But we’re really only two months behind. When I phone the lender, I get put on endless hold waiting to speak with a supervisor. We are starting to receive letters from investors who want to buy our house and other lenders who want to refinance our mortgage. But we have a low-interest-rate mortgage, which we want to keep.

One investor, when he discovered we don’t have much equity, said he didn’t want to buy our house. The lender is out of town so we can’t go visit the lender’s office. What should we do? Do we need a lawyer?

Marla S.

Hayward

A: Most institutional lenders do not want to foreclose. Your least-expensive alternative is to work out a forbearance agreement with your lender. That means you must faithfully make the regular monthly payment, plus pay an agreed amount monthly toward your default.

If your mortgage is a VA, FHA, Fannie Mae or Freddie Mac-owned loan, their rules require the loan servicer to try to work out an agreement. Unfortunately, those organizations often have no clue how poorly some of their loan servicers treat borrowers.

One sure way to get results is to phone the lender or loan servicer’s main office and ask to speak to the firm’s president. It helps if you have his or her name. You will usually be connected with an assistant who can get prompt action for you.

Explain the problem briefly, why the lender will lose money by proceeding with foreclosure because you have little equity and ask for help with a forbearance agreement. You will be amazed how nice the folks at the upper management levels can be.

Q: I sold my home in December 2004 and was recently sued by the buyers for alleged nondisclosure of defects. I don’t understand how the real estate brokers have no liability, even though no conversation ever took place between buyer and seller.

Luis Y.

Los Angeles

A: Home sellers can avoid liability for known defects by disclosing them in a written statement given to the buyer. In addition, sellers should have professional home inspections so they can disclose any hidden defects their inspector discovers, such as roof leaks. If you had done that, you would have no liability to the buyer for undisclosed defects.

The real estate agents have a fiduciary duty to the buyer to disclose any visual defects the agents spot that the seller failed to disclose. However, this is a very limited obligation, so don’t expect to shift your liability for defect nondisclosure to the brokers.

The fact you never talked to the buyer is irrelevant. If the buyer can prove you knew of a defect in the home and failed to disclose it in writing, you are liable to the buyer for damages.

Even if you sold the house “as is” (which means you won’t pay for any repairs), you still have a duty to disclose known defects to the buyer.

Q: Some time ago, there was a question in your column about an elderly husband and a much younger wife who owned their home together. You said the only way to get a reverse mortgage was for the young wife to sign a quitclaim deed to her husband. However, presuming he dies first, won’t that mean the reverse mortgage then comes due and the young wife will be left with the house but no way to keep it?

Anna L.

San Carlos

A: No. As you probably know, to qualify for a senior-citizen reverse mortgage, the homeowner(s) must be 62 or older. In fact, the older the better.

That is because homeowners in their 70s and 80s have a shorter life expectancy so they can obtain more funds from a reverse mortgage than can homeowners in their 60s.

In the situation you describe where the wife is not yet 62 but she co-owns title to the home, that disqualifies her older husband from obtaining a reverse mortgage. The obvious solution is for the young wife to quitclaim her title to the husband so he can obtain a reverse mortgage, which will benefit them both.

Presuming the husband’s will or revocable living trust leaves the home to the wife, and he dies first, she has to pay off the reverse-mortgage balance either by refinancing or selling the house.

Of course, if she is then at least 62, she can obtain a reverse mortgage to pay off the previous reverse mortgage.

Q: You said most real estate agents believe weekend open houses don’t sell homes. I’ve been a Realtor about eight years and I religiously hold an open house for one of my listings almost every Sunday afternoon. Of the 43 Sunday open houses I held in 2006, I sold all but 11 of those houses as a direct result. Agents who say open houses don’t sell homes are wrong.

Mark R.

Minneapolis

A: Realtors who don’t hold weekend open houses are missing key sales opportunities, as you emphasize.

The special report, “When It’s Smart to Prepay or Refinance Your Mortgage,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at (800) 736-1736 or instant Internet delivery at www.bobbruss.com. Questions for this column are welcome at either address.

Source:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/12/31/REG3GN62861.DTL