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posted: 9/14/2013 12:30 AM

Streamline for underwater mortgage

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Q. We are feeling trapped by our underwater mortgage. It's at 6.5 percent, and we can't refinance for a lower rate because we owe a little more than the house is worth. We have good jobs, good credit and some cash for closing costs. Is there any way we can take advantage of the low rates before they start going up?

A. If yours is a Veterans Affairs or a Federal Housing Administration mortgage and you have a good payment record, look into streamline refinancing. Both those mortgage programs offer this great process with no new appraisal, credit or income qualifications. If your own lender doesn't handle streamlining, start inquiring of other banks, or contact a mortgage broker for help.

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Q. I am an 82-year-old widow recuperating from cancer. I owned a rental property, and when it became vacant I wanted to sell it. My son asked me to sell it to my grandson. I took back a mortgage note with no interest. I did not record the mortgage at that time. My grandson paid me sporadically (he was without a job most of the time.)

In 2012, my grandson sold the house. The title search did not show the mortgage because my grandson knew I did not record it. He made a few more partial payments, and then he stopped. He refuses to talk to me.

I recorded the mortgage last December and notified the person living at the property but that was ignored. The man at the courthouse filed the mortgage wrong. He filed it showing I owed the mortgage to my grandson instead of the grandson owing to me.

Could you be so kind as to let me know the options I have for getting my home returned back to me, that I can do myself as I have no money for a lawyer? Also should I pursue getting the incorrect filing at the courthouse corrected?

A. Yes, you should get that misfiling corrected, and I expect you can do it on your own. Beyond that, I am sending you the phone number for your local Legal Aid Society, where you can ask for a free or low-cost consultation. You need more help than I can give you, and you should definitely talk this over with a lawyer.

It sounds as if there's no use suing your grandson, because a judgment is not much use if he doesn't have any money. I suppose if he has a job you might garnishee his wages. Ask the attorney.

As you realize, you could have protected yourself by putting that mortgage on file in the public records at the start. I doubt if you can get the house back, but I'm not a lawyer and that's just my guess. It's hard to say what's fair because the present owners had no way of knowing there was a financial claim against the property.

Mostly, you have my sympathy.

Q. My daughter has been married 12 years. Her husband is divorcing her amicably. At the time they bought their home in 2011 she was the only one employed so the loan is in her name only. On the paperwork, possibly the warranty deed or the loan work, it is mentioned that she is married and her husband's name is listed.

She plans to stay in the house and continue payments for now. How does she get the spouse info off the paperwork? They are filing divorce paperwork themselves without benefit of an attorney.

A. I must congratulate them on such a levelheaded approach to their divorce. Accomplishing what they want is a simple matter. It should not be expensive to have a lawyer take care of a new deed after checking whether there might be any unintended complications from the transfer.

Q. I am wondering that if I make one or two extra payments on the principle of my mortgage a year how much sooner or years does that knock off my mortgage?

A. I can't tell without knowing the term of your mortgage, how far along you are in it, and what interest rate you're paying. You can find Internet programs that will make the calculation by Googling "extra mortgage payment."

But I can tell you that if you have, for example, a 5 percent mortgage, then investing cash in a quicker payoff is like earning 5 percent on that extra money every year from then on.

• Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (include a stamped return envelope), or readers may email her through askedith.com.

2013, Creators Syndicate Inc.

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