A son appears stuck in a mortgage with ex-girlfriend

Q. My son and his girlfriend bought a home together two years ago. It cost $240,000 with no money down and an adjustable-rate mortgage. They have since split up. The girlfriend wanted to stay in the home as she has a child. My son moved out and she agreed to pay all the bills. I think her new boyfriend helps.

My son has since found a wonderful woman and wants to start a life with her, but cannot fully until this house concern is gone from his life. The girlfriend cannot take over the loan on her own, as she does not make enough money. As we understand it, just signing the house over to her will not take him off the mortgage note. He's ready to sell the house for less than they paid but the girlfriend will not help pay the difference. His life is on hold at this point. Is there anything he can do?

A. Not unless he's willing to sell and "pay the difference" on his own. He's just lucky monthly payments are being made. His credit record would suffer if they weren't. Legally speaking, each of them is responsible for the entire debt. And yes, giving up his share of ownership wouldn't change his mortgage liability.

It's important to remind people of the complications that can arise when unmarried partners buy property together and later split up. Or married partners, for that matter, particularly right now in areas where the real estate market is difficult.

Your son does have the right to go to court and force "partition" - a public auction sale of the property and division of the proceeds. But that won't do much good if the place can't even be sold on the open market for enough to pay off the loan. Again, it would work only if he were willing to make up the whole shortfall with his own funds.

Q. Where can you get financing to buy a home as is?

A. If the house isn't in good enough condition to meet the standards of a regular mortgage lender, usually the seller agrees to take back a private mortgage, acting as the bank.

"As is" can mean almost anything, though. If the house is in fairly good shape, perhaps a regular lender will consider it after all. There's even a special FHA mortgage, 203k, that lends enough to cover both purchasing and renovating a house that needs considerable work. Perhaps a mortgage broker could help locate a lender handling that program.

Q. We had to sell our Miami condo at a loss. Somebody told us we could take that as a deduction on our tax return. Somebody else told us we couldn't. Which is correct?

A. If you had used your condo as a rental unit (and declared it as such in the past), you can probably claim a loss. The calculations can be complicated, involving things like recaptured depreciation, so get guidance from a tax professional.

But if the condo was simply your own second home, then no, you cannot claim a capital loss. The IRS says it's as if you bought a second car for your own use and then sold it for less. No deduction.

Q. What is a reasonable percentage to expect to deduct off the listing price of a home, especially when the house has been on the market for more than seven months? I'd like the answer for regular resales, new construction and foreclosures/bank-owned properties.

A. If all things were equal, it might be possible to find a rule for each situation you mention. But all things are not equal, and the biggest difference is in an individual seller's motivations.

Some list at a bargain price because they hate negotiating or they need a quick deal. Some list unrealistically high just to see what will happen, not caring whether they sell this year or next.

Most builders know how much they have spent on a new house and in normal times aren't inclined to bargain, except on upgrades where they have more leeway. A builder in trouble, though, may need quick cash. Or might, on the other hand, simply intend to go bankrupt in the near future.

As for bank-owned properties, judging from the mail I get, those are complicated to buy, and negotiations can be frustrating even with full-price offers.

So no, I can't give you any guidelines. I can tell you one thing for sure, though: When a house has been widely exposed on the market at the same price for seven months, it is not worth what they're asking.

• Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.

2009, Creators Syndicate Inc.