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  1. #1
    Join Date
    Dec 2018
    Location
    Bushkill, Pa.
    Posts
    4

    Default Defaulting on a Mortage Taken Out to Help Family

    My question involves a consumer law issue in the State of: Pennsylvania.

    I believe I may have to default on my mortgage loan. I'll try to be as brief as possible. I am 79 years old and have a decent pension with some social security and have an excellent credit rating of over 750. I have maintained a high rating all my working and retired life. I was living in an apartment until I had a visit from my niece. She told me that she had to move out of her neighborhood due to increasing crime but lacked the funds or the credit rating to do this on her own.

    I said I'll apply for a mortgage as soon as we can locate a house. I told my niece that she and her husband only had to pay for the utilities and maintenance costs and improvements and I would pay the full cost of the mortgage, insurance and the taxes. I even had her name placed on the deed to save her some money so that she would not have to pay transfer tax after my death. It is a good deal for them and I felt good about helping them get away from the crime. Well it appears not to be working out at all. My niece and her husband work for a flooring company and they lose too much time between jobs and sometimes they are late paying the utility costs.

    Now they claim that they do not have enough money to pay for the maintenance of the house. My niece lied when she told me she and her husband together make $5,000 a month. So we have been in our home for a year since August and in October I gave them written notice that continuing to work for the flooring company was no longer acceptable. So I told them(option 1)they would have to either give me the same amount that I pay for mortgage, insurance and taxes if they continue to work for the flooring company and I would take care of all expenses and start an escrow account for future maintenance costs. Or option 2: If they quit working for the flooring company and get a regular 5 day working jobs, then I would continue my share of expenses and they would continue to pay the utilities and maintenance costs.

    They decided to take option 2. I gave them both 6 months to find employment. To the best of my knowledge, niether of them have tried to find full time employment so far. So on April 30th, if they are not working for another company on a 5 day basis, I will leave and they will have to pay all the expenses which I doubt. This will most likely result in a foreclosure. I do not like to go this path but I see no other choice because the house is too big for me to take care of and I cannot afford a lawyer which may cost me thousands even if I manage to have them kicked out. I am already trying to pay down a $7,000 credit card debt.

    I feel like I am stuck between a rock and a hard place. I also would be a fool to continue stay under the current arrangements. So what expenses will I be exposed to if foreclosure occurs? My name is the only one on the mortgage loan.

  2. #2
    Join Date
    Mar 2013
    Posts
    16,668

    Default Re: Defaulting on a Mortage

    Somebody should have told you that bailing out relatives is always a bad idea.

    Anyway, PA is a recourse state which means that after the mortgage company forecloses and sells the property, if the sale proceeds don't cover the balance, the mortgage company can come after you for the deficiency and sue you for it if you don't pay it.

    Fortunately, your Social Security benefits are exempt from judgment. Qualified retirement accounts are also exempt (IRAs, Roths, 401(k) plans).

    Your pension may also be exempt under PA statute 42-8142.

    You'll have to check the details of your pension against the statute.

    There may be other exemptions there, too.

    Your credit score will certainly take a big hit, maybe as much as 200 points.

  3. #3
    Join Date
    Dec 2018
    Location
    Bushkill, Pa.
    Posts
    4

    Default Re: Defaulting on a Mortage

    Thanks adjusterjack,
    The retirement funds I was also concerned about. I'll look into that link to see if my pension can be effected.

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