Advice needed - sister's home in foreclosure - terminal cancer

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Retiredron
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Advice needed - sister's home in foreclosure - terminal cancer

Post by Retiredron » Mon May 11, 2020 8:31 am

Thank you for any advice you can offer in this complex situation.

My sister (77) has terminal cancer and will be moving into hospice care and I just learned from her two sons (one lives with her and one is married; her husband passed) that she is 12K behind on her New Jersey home equity loan and the home equity company has sent a notice that they are starting the foreclosure process. However, they will stop that process if she gets the account back on track with a 12K payment. She hasn't been served with a court notice yet. The company will not accept a payment plan (I think she has been ignoring their letters for many months). Unfortunately, other than the house and a small amount in checking there are no other assets to use for making this back payment.

The home equity company suggested she apply for mortgage assistance and my nephew applied via the company web site last Friday. The home is worth about 600K and she has a loan balance of about 95K. She has been using this loan to cover living expenses. She has a small social security payment but no other income. Unfortunately she has no will and no power of attorney in place and it seems too late for that given her condition.

Any thoughts on how best to proceed here? I do not live close to her so I'm trying my best to support my nephews in this difficult time. My nephews have limited resources but I could certainly help them get the loan current. I assume that when she passes her estate will still be responsible for satisfying the loan and my nephews will have to sell the home to pay that off. Thank you.

TallBoy29er
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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by TallBoy29er » Mon May 11, 2020 8:38 am

First, I'm very sorry to hear about your sister. And having to deal with this on top of things is clearly not ideal.

If the family does not have the resources to pay off the HELOC, or at least keep current on payments, then it sounds like selling the house is in the very near future. I am oversimplifying, but it feels as though either the family controls that process, or the bank does if a foreclosure takes place. I would try very hard to make the former happen, even if that means you help with the $12k to get things caught up. Of course, when the sale takes place, and if the nephews are on board, are two complicated questions as well. But if this were me, I would want to get the bank off my back, and avoid foreclosure, especially with all that is going on.

All the best to you, and your family.

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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by goodenyou » Mon May 11, 2020 8:40 am

All families are different. By what you described, I can tell you what I would do in my family if I were faced with that decision. I would pay off the loan for my sister and nephew to keep the nephew in the house temporarily. I would take a lien on the house or some other way to secure my equity position in order to possibly be made whole in the future. Then, I would assess whether the nephew can reasonably live in the home given the cost structure. If not, I would tell the nephew he has limited time (up to a year) to figure out his living situation. I would tell the living heirs that the proceeds of the sale of the home would be split according to your sister’s wishes.

Family relationships and dynamics are different.
Last edited by goodenyou on Mon May 11, 2020 8:49 am, edited 1 time in total.
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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by bayview » Mon May 11, 2020 8:40 am

I’m very sorry for you and your family.

One side question: you say that given her condition, it’s too late for a Will and setting up POAs. Is her mental state impaired due to her illness and/or meds? (understandable if so)

If not, I would think that even a generic online will plus POA forms would be better than nothing.

I assume that since she’s going into hospice that she does have advanced directives set up?
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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by Dottie57 » Mon May 11, 2020 8:41 am

If you have the resources, get the loan up to date. Is your sister still living in the house while in hospice.

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Stinky
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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by Stinky » Mon May 11, 2020 8:46 am

If New Jersey is like most states, I expect that your sister's two sons (your nephews) would get equal shares of her assets when she passes away, absent a will saying anything else.

It sounds like neither nephew will have the financial wherewithal to keep the house, so I expect it will need to be sold soon. As a part of the sale process, the home equity line will be paid off.

I would do all that I can to keep the house from being foreclosed upon. If the mortgage relief applied for can keep the bank away from the door for a while, that's great. Otherwise, it would make sense for you to put up the $12k, supported by a lien on the property, to keep the bank away.

Sorry for your situation. You're being a good brother and uncle if you can help your sister and nephews get through this trying time.
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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by BarbBrooklyn » Mon May 11, 2020 8:51 am

Haven't foreclosures been stopped in NJ due to COVID?

https://www.google.com/amp/s/www.nj.com ... utType=amp
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Retiredron
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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by Retiredron » Mon May 11, 2020 8:58 am

Thank you all so much for the quick replies. Yes, my sister is confused and not is a good state of mind so I don't see her executing any documents but I will urge my nephews to consider options. They have been caring for her in the home the last few weeks and are exhausted and totally focused on her care right now.

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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by 8foot7 » Mon May 11, 2020 9:07 am

I think I would advance $12k to get the loan current to preserve an asset worth 600k that is going to be foreclosed on for a 95k loan because I can assure you no one will be looking to maximize that 600k and all the bank will care about is getting their 95k out of it, which they are assured to do. Put a lien on the home for the 12k and feel good about doing a good deed for your family (I'd do this even if I weren't in line to inherit anything).

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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by BarbBrooklyn » Mon May 11, 2020 9:10 am

Off topic, but consider that the sons might consider a hospice facility at this point
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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by MrsBDG » Mon May 11, 2020 11:50 am

I agree with the above posters, if able I would be inclined to pay the $12k, but then you have to also stay on top of the monthly payment. I would most definitely record a lien etc., so that I was repaid by the proceeds of the sale. If the sons are financially unaware enough to be in foreclosure, they may be financially naive enough, or simply overwhelmed and exhausted by everything, to not repay you.

Caveat, just because one qualifies for hospice does not mean they will be dead in 6 months, my Dad qualified for hospice for nearly 4 years. If you end up committing to a monthly payment, be aware that this could take longer than you assume, are you ok without the money for that long? Are you ok with monthly payments that long? Would it be better to sell now and have her move into the hospice facility? Also, assume that 6-12 months from now it is possible the RE markets are slow what with the ramifications of C19 filtering through.

If she is able to express what she wants, you could likely do a free or, at last, LegalZoom will online. If she has a couple of friends/neighbors who could serve as witnesses and she is able to express to them that she understands it, also the POA would be helpful.

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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by Dottie57 » Mon May 11, 2020 11:54 am

BarbBrooklyn wrote:
Mon May 11, 2020 9:10 am
Off topic, but consider that the sons might consider a hospice facility at this point
This. Her home can be used as collateral for payment if necessary. Papers would have to be signed. This would probably be best for all.

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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by Watty » Mon May 11, 2020 12:10 pm

I don't know what paperwork would be involved but if the sister has any other assets like a car that could be sold to raise the money needed to get the loan current.

If your nephews expect to inherit the property it is really in their interest to figure out a way to avoid foreclosure. The problem is that if it goes into foreclosure there will be all sorts of fees and expenses and they the lender is likely to sell it off for a low price. Having the house forclosed on could result in them receiving a much smaller inheritance.

It would also be good to talk with the people at the hospice since they may have dealt with similar situations.

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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by Jags4186 » Mon May 11, 2020 12:14 pm

If you want to maximize the amount of money your nephews receive from the sale of the home, I would bring the loan up to date with a lien and repayment on sale. I think the worst thing that could happen now is a foreclosure sale during an economic disaster.

IMO
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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by IMO » Mon May 11, 2020 1:05 pm

1st, very sorry about your sister.

Home is worth $600K with a $95K mortgage and $12K past due and going into foreclosure soon.

SOMEONE come up with $12K to get home out of foreclosure, and put the house up for sale asap. SOMEONE gets their money back plus interest after the sale.

Presuming she won't have massive health care costs? Then the heirs can use the approx $400K after the sale and your sister's passing to help improve their life situations, which I suspect your sister would desire.

Hopefully sell before her passing to get her $250K tax free appreciation.

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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by Mako » Mon May 11, 2020 1:16 pm

IMO wrote:
Mon May 11, 2020 1:05 pm
1st, very sorry about your sister.

Home is worth $600K with a $95K mortgage and $12K past due and going into foreclosure soon.

SOMEONE come up with $12K to get home out of foreclosure, and put the house up for sale asap. SOMEONE gets their money back plus interest after the sale.

Presuming she won't have massive health care costs? Then the heirs can use the approx $400K after the sale and your sister's passing to help improve their life situations, which I suspect your sister would desire.

Hopefully sell before her passing to get her $250K tax free appreciation.
The heirs should get a stepped up basis after sister passes, so the last sentence shouldn't really matter (and selling before may even be worse depending on her basis).

I agree with the rest.

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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by BarbBrooklyn » Mon May 11, 2020 1:36 pm

Also, make sure that sons consider any Medicaid-related ramifications. As an up thread poster said, hospice does not always indicate a quick demise.
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Retiredron
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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by Retiredron » Mon May 11, 2020 2:16 pm

Thank you all again for the kind words and advice. One question - do I need my lawyer to prepare a lien or is that something I can do on my own? I have no experience with liens.

Thanks to an earlier post I confirmed that the NJ governor has signed legislation preventing any foreclosures during the Covid state of emergency and up to two months after the emergency ends so that buys my nephews some time I think. I am prepared to help them with the 12K but do want to get paid back at some point after the house is sold.

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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by Big Dog » Mon May 11, 2020 2:24 pm

if you are close to your nephews and they are responsible, I'd pay off the $12k and the $95k (assuming the total balance due is $107k). Make your own note, at say 4% and file it against the house. Offer to rent to nephew for up to 6 months after his mom passes, at which point y'all sale the place, recapture your note+interest, and the boys get the balance.

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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by Carefreeap » Mon May 11, 2020 2:45 pm

Does the son who lives with her have a job? If the loan is brought current with $12k can he keep making the payments going forward?

$12k seems like a lot of missed payments for a $95k loan. I assume there are late payments involved but they are usually interest only loans. Even fully amortized over 30 years at 4.5% I come up with a payment of less than $500/mth.
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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by BarbBrooklyn » Mon May 11, 2020 4:54 pm

So, I'm going to speak the unspeakable here.

Just make sure that this whole request is legitimate. I'm sure your sister is terminally ill and that there is financial need.

The fact that they didn't realize that there is foreclosure relief in their state raised the "suspicious" hairs on the back of my neck. I hate to be this way; just proceed with caution.
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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by Sandi_k » Mon May 11, 2020 9:24 pm

Retiredron wrote:
Mon May 11, 2020 8:58 am
Thank you all so much for the quick replies. Yes, my sister is confused and not is a good state of mind so I don't see her executing any documents but I will urge my nephews to consider options. They have been caring for her in the home the last few weeks and are exhausted and totally focused on her care right now.
When my BFF was dying of cancer in 2010, and in and out of the hospital with multiple surgeries, we had a local attorney who went to her hospital and had her validate a will and POA. We paid travel costs, but it was not exorbitant.

If your sister has good days (or mornings, or afternoons) I would absolutely set that up. And for $12k, I'd pay the arrears myself to bring it current, so her sons could inherit the house. A simple lien on the house or loan agreement notarized by the attorney would be sufficient to protect your interests.

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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by Sandtrap » Mon May 11, 2020 9:35 pm

Seek legal counsel to orchestrate the suggestions in this thread, and to take care of everyone’s needs.
A third part with a calm objective mind is important.
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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by BarbBrooklyn » Mon May 11, 2020 11:26 pm

Sandtrap wrote:
Mon May 11, 2020 9:35 pm
Seek legal counsel to orchestrate the suggestions in this thread, and to take care of everyone’s needs.

A third party with a calm objective mind is important.
j🌺
+1
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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by Katietsu » Mon May 11, 2020 11:59 pm

Attorneys have experience going to hospice patients to handle these matters. I would think you would need your sister to agree and sign for a $12k loan with a lien on her house. If she can do that, it would be better if instead she signed a very broad POA. With the POA, her sons can address any of this other issues without stressing her out about the details.

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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by InMyDreams » Tue May 12, 2020 11:49 am

Big Dog wrote:
Mon May 11, 2020 2:24 pm
if you are close to your nephews and they are responsible, I'd pay off the $12k and the $95k (assuming the total balance due is $107k). Make your own note, at say 4% and file it against the house. Offer to rent to nephew for up to 6 months after his mom passes, at which point y'all sale the place, recapture your note+interest, and the boys get the balance.
+1 - or at least include several months of mortgage payments in the amount that you loan, so that you don't wind up in the same situation in the short term.

Also, keep an eye on property insurance and tax.

Side note - it's not as easy to linger on hospice as it once was. Hospices are under much stronger requirements to show why a patient remains on service for more than a couple of cert periods.

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Re: Advice needed - sister's home in foreclosure - terminal cancer

Post by Golf maniac » Tue May 12, 2020 8:21 pm

First, her children need to call the mortgage company and explain the situation. See if they will provide any relief. They may be unwilling to talk to the kids because they are not on the mortgage, but it is worth a shot. Second, do not loan the money to catch up the payments. You can not get a lien on the home because the owner is incompetent. If the kids want to put up the money or get a personal loan from you and you are comfortable doing that then that is okay. Third, have her kids get a lawyer involved. Foreclosures are very time consuming and slow processes. Having a lawyer involved will help the kids navigate the process.

God bless and good luck.

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