ARTICLES & NEWS

REAL ESTATE FINANCING ARTICLES

Mortgage repayment failure

Statute of Limitations for HELOCs

By Christopher Combs | July 26, 2020

Question: When we bought our Chandler home in 2006, we got a 30-year first mortgage with Bank of America, and a Wells Fargo $100,000 second mortgage home equity line of credit (“Wells Fargo HELOC”). We used this $100,000 for a swimming pool and for landscaping in our back yard. In 2011 we both lost our jobs and we had financial difficulties. Although we were able to keep our first Bank of America mortgage current, we stopped paying our Wells Fargo HELOC. Last week we received a letter from an attorney that our Wells Fargo HELOC balance is $160,000, and that…

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Morgage transfer

Will My Children Owe Mortgage Balance In Full When I Die?

By Christopher Combs | May 31, 2020

Question: I own three rental properties in Surprise. Each one has a bank mortgage with a “due on sale” clause, i.e., the mortgage must be paid in full upon any transfer of the rental property. My revocable living trust states that my three children become the owners of these three rental properties upon my death. Will the “due on sale” clause in each of these mortgages require my children to pay the entire mortgage balances on these rental homes when I die? Answer: No. Under a 1982 federal law there are exceptions to the enforcement by mortgage lenders of standard…

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Baby room

Son Entitled to Appreciation in Home’s New Value

By Christopher Combs | May 3, 2020

Question: My son and his girlfriend bought a home in North Phoenix three years ago as tenants in common. They each contributed $15,000 for the down payment, and my understanding is that they have been splitting the monthly mortgage payments and other home expenses. Last year they had a baby, and they needed another bedroom. We loaned our son $20,000 to add on a bedroom. Although my son and his girlfriend are happy now, what happens if they break up and have to sell the home? Will my son get back from the proceeds the $20,000 cost of the bedroom…

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1031 exchange

Restrictions Apply on Tax-Free Deferred Exchange of Homes

By Christopher Combs | March 8, 2020

Question: Ten years ago after the “crash” we bought a rental home in North Phoenix. This rental home has appreciated in value by $200,000 in the last ten years. We now want to sell this North Phoenix home, and to use the $200,000 sale proceeds to build a home in Chandler as our personal residence. We do not want to pay any tax on the $200,000 capital gain on the sale of the North Phoenix home. Can we use a section 1031 tax-free deferred exchange to sell the North Phoenix home and use these $200,000 sale proceeds to build our…

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Tenancy in Common

Sale of Tenancy in Common Home

By Christopher Combs | December 1, 2019

Question: My next-door neighbor and I wanted to build a “spec” home in Peoria. My next-door neighbor then bought the lot for $100,000, and we took title to the lot as tenants in common. My next-door neighbor did not have good credit, so I took out the construction loan of $300,000 to build the home. The home has been completed with an appraised value of $600,000. If the home sells for $600,000, how will these $600,000 sales proceeds be divided between me and my next-door neighbor? Answer: In order to calculate the division of the $600,000 sales proceeds, you should…

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Foreclosure For Sale

Partial Payment Doesn’t Cancel Foreclosure

By Christopher Combs | September 8, 2019

Question: After our parents passed away two years ago, my sister and I became the owners of their home in Sunnyslope worth $280,000. My sister wanted to live in the home, so I deeded the home to her in exchange for her giving me a five-year $140,000 mortgage on the home. In addition to the monthly mortgage payments, my sister was to pay the property taxes and the homeowner’s insurance. My sister has never made one mortgage payment to me, and I have been paying the property taxes and the homeowner’s insurance. I finally hired an attorney to do a…

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Documentation Releasing Seller Carryback

By Christopher Combs | June 18, 2019

Question: Ten years ago we purchased 40 acres of vacant land near Coolidge with seller carryback financing. In other words, we signed a promissory note to pay the seller monthly payments secured by a deed of trust on the 40 acres of vacant land. The final monthly payment to the seller is due next month. When I make this final monthly payment to the seller, what happens? Answer: Seller carryback financing is a mortgage from the seller, just like a mortgage from Bank of America or any other mortgage lender. After you make the final payment to the seller on…

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Who Pays Reverse Mortgage When We Die?

By Christopher Combs | May 16, 2019

Question: My husband and I live in Leisure World in Mesa. We paid cash for our home. We have been talking to a neighbor about the benefits of a reverse mortgage so that we can get the money to do more traveling. If we get a reverse mortgage, who pays off the reverse mortgage when we die? I am concerned that our children will have to pay off the reverse mortgage. Answer: There is no requirement to “pay off” of the reverse mortgage when you die.  The reverse mortgage lender will sell your home, and after satisfying the amount owed…

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