Sad tale may reveal a lesson on home buying

Q. I lost my job last year and was unable to make my mortgage payments. I owe $400,000 on two loans, but the house is now only worth approximately $310,000. It has been on the market since last June, and we received three good short-sale offers that required bank approval. The first one last summer, for $370,000 cash, would have almost paid off my loans. But with each one, the two banks involved kept giving my Realtor and me the runaround, losing paperwork, not returning calls, etc. And the buyers finally gave up.I have moved to be near family, so I no longer live in the house, which is up north. My Realtor called me last month to tell me that the pipes froze/burst, and the inside of the house (which was beautiful when I left) is now destroyed.A. Now everyone loses - you, the lenders, your agent, the insurance company, the neighborhood and perhaps even the taxpaying public.I don't usually publish letters when all I can offer is sympathy. I'm including this one, though, in hopes that someone at a bank will read it and take note.Perhaps, your story may end up doing some good somewhere.We lived in our old home for 30 years and moved into a manufactured home in February 2010. To get the tax credit, we're told we need to complete Form 5405 with our income tax return and include the HUD-1 form. We did not receive one at the time of closing. What are your thoughts on this situation?A. It sounds as if you qualify as repeat buyers and your closing date is right. The tax credit of 10 percent of purchase price (up to $6,500) is available for the purchase of a house, condo, a manufactured home or even a houseboat if it will be your next main residence.You did not receive a HUD-1 settlement form because you evidently don't own the land underneath your home, so you didn't actually buy real estate. Instead, the IRS will accept appropriate proof of your purchase.In March 2009, I purchased a home from my parents. I went through a closing company and had everything done as if I was getting a mortgage through a bank, only my parents were holding the note. I paid $2,000 for the closing. My mortgage broker assured me that in so doing, it would qualify me for the $8,000 income tax credit.But when doing my taxes on Turbo Tax, it doesn't seem that I qualify simply because I bought the house from my parents. Is this true?A. It's not clear why you needed a mortgage broker if you already had private financing. Certainly not for tax advice, since the first-time buyer tax credit isn't available for transactions within a family.Any information on foundation work? What company or type of repair works best? My mom is wanting to sell her home of seven years and downsize. We have heard that you never get your money out of repairing a foundation and that it might be better to sell as is and adjust the sales price. Any information would be helpful.A. As so often, local real estate agents can judge better than I can from this distance. It doesn't cost anything or obligate you to phone nearby brokerages and ask for advice.My mother died in December. I would like to keep her house, but my brother wants to sell it and sees it as fast money. Right now, it is not bringing in any money because we are only paying the bills until we get the word from the lawyers. Wouldn't it be better to try to keep the place if possible? Since the house is paid for, we could use it as rental property or rent it out as a vacation home. I'm looking at the bigger picture, even though we are not reaping anything from it.A. You don't say where the property is located. It can be difficult renting out a house unless you live near enough to keep an eye on it. It's easy for an amateur landlord to get into all kinds of trouble.Ask yourself: Would you go partners with your brother today in order to buy a house in that town as an investment? Because if you don't sell it, you're buying it.bull; 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.2010, Creators Syndicate Inc.