By Tom Resnick
Q. Our daughter divorced and moved into a townhouse with her two sons. She receives child support until the boys turn 18. The youngest will turn 18 this summer.
She will not be able to pay her mortgage without that additional money. She is threatening to just walk away and get an inexpensive apartment. My wife and I are co-signers on her mortgage. Will we now have to pay her mortgage? We are in our 70s and don't have much extra money. What are our options?
A. You indicate she will not be able to pay her mortgage when the child support stops, which indicates she is now current. Unfortunately, lenders often won't talk to borrowers about modifications or other options when the borrower is current.
As you can imagine, lenders are so busy addressing defaulting borrowers that current borrowers are a very low priority.
Is there any equity in the property? Obviously, if there is, you and your daughter should be motivated to preserve the equity, either through a refinance, loan modification or sale.
What is the interest rate on the loan? Would a reduction in the interest rate to 2 or 3 percent financially allow your daughter to stay? If so, start attempting to contact the lender to explain your daughter's situation and request a modification. A typical loan modification might lower the interest rate to 2 percent for a few years, then 3 percent for a period of time and then go to 4 for the remaining life of the loan. Depending on her current rate, this could lower her payment by hundreds of dollars a month.
If a modification won't help and she is determined to leave, one of your best, if not the best, option is to request the lender accept a deed in lieu of foreclosure. Here, the owner(s) simply convey the property to the lender in exchange for the lender canceling the note.
No money is due, regardless of whether or not the lender can recover all that is owed to them through the sale of the property.
The main advantage to the homeowner is that there is no threat of a deficiency judgment, though the homeowner (and any co-signors) will take a credit hit. The main advantage to the lender is that they recover the property far quicker than if they are required to litigate a foreclosure action.
As the co-signor, you are essentially in the same boat as your daughter.
Either with a deed in lieu or a full scale foreclosure action, you and your wife will also take a credit hit, though perhaps you are not as concerned about that as she may be. And, it is hard to picture a lender chasing you and your wife for a deficiency judgment if the lender was forced to proceed with the foreclosure.
I suggest contacting a real estate attorney to further explore your options.
Q. I filed a complaint to protest my real estate tax bill in McHenry County. I went to a hearing and they told me they would reduce my bill. I didn't walk out with anything and now wonder if I will ever see the reduction they promised. Shouldn't I have received something when I left the hearing?
A. First, a point of clarification. You did not file a complaint to protest your tax bill, you filed a complaint to challenge and hopefully reduce the assessed valuation of your property.
As the assessed valuation is a major component of your real estate tax bill, presumably, lowering your assessed valuation will ultimately lead to a reduction in your tax bill, though that is not guaranteed.
You could prevail in reducing your assessed valuation, but if the other components of your tax bill -- those being the tax rate and the multiplier -- increase, that could wipe out your gain from a valuation reduction.
Don't worry about not receiving anything when you left the hearing. Hopefully, though, you wrote down your revised valuation figure.
Your tax bill will be coming out next month and you should make sure the assessed valuation on your tax bill is consistent with the reduction you received at the hearing. If it is not, contact the assessor.
• Send your questions to attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by email to firstname.lastname@example.org or call (847) 359-8983.