This is a little OT, but I am going to take over the mortgage on my
son-in-law and daughters house as I can get more interest from them
than on a cd and they will get a lower rate from me than they can get
at a bank. (5%). What is a good, cheap way to get the mortgage forms,
and what are the different pieces of paper called. It has been a long
time since my wife and I had a mortgage and I am rusty on all the
various names.

TIA

Bob Hofmann

In article
,
"hr(bob) " wrote:

This is a little OT, but I am going to take over the mortgage on my
son-in-law and daughters house as I can get more interest from them
than on a cd and they will get a lower rate from me than they can get
at a bank. (5%). What is a good, cheap way to get the mortgage forms,
and what are the different pieces of paper called. It has been a long
time since my wife and I had a mortgage and I am rusty on all the
various names.

TIA

Bob Hofmann

I dunno, but when you find the forms, I'll take a few of those 5%
mortgages...

On Wed, 5 Mar 2008 20:35:07 -0800 (PST), "hr(bob) "
wrote:

This is a little OT, but I am going to take over the mortgage on my
son-in-law and daughters house as I can get more interest from them
than on a cd and they will get a lower rate from me than they can get
at a bank. (5%). What is a good, cheap way to get the mortgage forms,
and what are the different pieces of paper called. It has been a long
time since my wife and I had a mortgage and I am rusty on all the
various names.

TIA

Bob Hofmann


I don't think you can issue a private mortgage to another private
party. Only licensed mortgage companies can do so. This is how I
would consider the problem. Make a private loan to your son to pay
off his bank mortgage. Your son will pledge the title to his property
as security. That security pledge will be a lawyer vetted document
transferring the property to you but remains undated, to be effective
any time the date is inserted. You should register this document with
some government authority. On a separate contract spell out this fact
together with the terms of repayment, etc. Don't do this on a
handshake. A house is a big ticket item. If there is trouble you not
only lose the money you also lose your son and his family. You can
always forgive the loan. But never put him in a situation where he
can delay a problem by stalling. That delay wreaks even the closest
relationships. Don't forget you have to declare the 5% as income for
tax purposes.

wrote:

This is a little OT, but I am going to take over the mortgage on my
son-in-law and daughters house as I can get more interest from them
than on a cd and they will get a lower rate from me than they can get
at a bank. (5%). What is a good, cheap way to get the mortgage forms,
and what are the different pieces of paper called. It has been a long
time since my wife and I had a mortgage and I am rusty on all the
various names.

TIA

Bob Hofmann


This is a risky proposition! You have to consider what happens when
your son-in-law/daughter can't pay. Do you let it slide? Create a
fuss, awkward situation, or family resentment? A CD is insured,
what you are proposing is not! If you want a fairly safe investment
in real-estate, then consider an AAA-rated GNMA fund and backed by the
US government. If you still want to float your daughter a loan, get a
real-estate lawyer to draw up the paperwork, and maybe we can watch
y'all on Judge Judy!

In article ,
Phisherman wrote:

wrote:

This is a little OT, but I am going to take over the mortgage on my
son-in-law and daughters house as I can get more interest from them
than on a cd and they will get a lower rate from me than they can get
at a bank. (5%). What is a good, cheap way to get the mortgage forms,
and what are the different pieces of paper called. It has been a long
time since my wife and I had a mortgage and I am rusty on all the
various names.

TIA

Bob Hofmann


This is a risky proposition! You have to consider what happens when
your son-in-law/daughter can't pay. Do you let it slide? Create a
fuss, awkward situation, or family resentment?
Also, if you give them a below market interest rate, there can
be some rather nasty tax consequences. Personally I wouldn't touch this.

In article ,
Phisherman wrote:

You have to consider what happens when
your son-in-law/daughter can't pay.

That's easy. He forecloses on them, and since they're now homeless, they
move in with Dad.

hr(bob) wrote:
This is a little OT, but I am going to take over the mortgage on my
son-in-law and daughters house as I can get more interest from them
than on a cd and they will get a lower rate from me than they can get
at a bank. (5%). What is a good, cheap way to get the mortgage forms,
and what are the different pieces of paper called. It has been a long
time since my wife and I had a mortgage and I am rusty on all the
various names.
....

"Good" and "cheap" are basically mutually exclusive.

Don't even consider this w/o legal representation for yourself and I
would strongly recommend the SIL/daughter retain counsel for their
interests in any such transaction besides.

It's not clear whether there's a current mortgage to deal with the
lienholder or this is a new purchase idea, but either will have its own
peculiarities plus whatever else there is that is unique in the situation.

As others note, there are also potential tax issues here -- below market
interest rates are an area the IRS does look at...

--

h wrote in message ...

"PaPaPeng" wrote in message
...
On Wed, 5 Mar 2008 20:35:07 -0800 (PST), "hr(bob) "
wrote:

This is a little OT, but I am going to take over the mortgage on my
son-in-law and daughters house as I can get more interest from them
than on a cd and they will get a lower rate from me than they can get
at a bank. (5%). What is a good, cheap way to get the mortgage forms,
and what are the different pieces of paper called. It has been a long
time since my wife and I had a mortgage and I am rusty on all the
various names.

TIA

Bob Hofmann


I don't think you can issue a private mortgage to another private
party. Only licensed mortgage companies can do so. This is how I
would consider the problem. Make a private loan to your son to pay
off his bank mortgage. Your son will pledge the title to his property
as security. That security pledge will be a lawyer vetted document
transferring the property to you but remains undated, to be effective
any time the date is inserted. You should register this document with
some government authority. On a separate contract spell out this fact
together with the terms of repayment, etc. Don't do this on a
handshake. A house is a big ticket item. If there is trouble you not
only lose the money you also lose your son and his family. You can
always forgive the loan. But never put him in a situation where he
can delay a problem by stalling. That delay wreaks even the closest
relationships. Don't forget you have to declare the 5% as income for
tax purposes.

Plus, the son cannot take any mortgage tax deductions, since it won't be a
mortgage, just a loan.


I'm not so sure about that. What makes a loan a mortgage? What it's used
for, or who you get the loan from? Sounds like a question for the IRS or a
tax attorney. I'm not about to go poking around in Turbotax at the moment,
but clues might be there, too.

JoeSpareBedroom wrote:
h wrote in message ...
....

Plus, the son cannot take any mortgage tax deductions, since it won't be a
mortgage, just a loan.
....
I'm not so sure about that. What makes a loan a mortgage? What it's used
for, or who you get the loan from? ...

What makes a loan a mortgage is what the collateral is. If the
collateral is the property, its a mortgage. Mortgage interest on
primary and/or secondary is deductible irregardless of the payee.

But, it needs to be structured properly for this and other enumerated
reasons and shouldn't even be considered w/o proper legal representation
for each party...

--

On Mar 6, 9:29*am, dpb wrote:
JoeSpareBedroom wrote:
h wrote in m...

...



Plus, the son cannot take any mortgage tax deductions, since it won't be a
mortgage, just a loan.
...
I'm not so sure about that. What makes a loan a mortgage? What it's used
for, or who you get the loan from? ...

What makes a loan a mortgage is what the collateral is. *If the
collateral is the property, its a mortgage. *Mortgage interest on
primary and/or secondary is deductible irregardless of the payee.

But, it needs to be structured properly for this and other enumerated
reasons and shouldn't even be considered w/o proper legal representation
for each party...

--

I am going to have a regular mortgage on the property, the land and
the house are the collateral for the oan, just like as if I were a
bank. I will have to issue a 1098 form to them for the interest paid
each year just like a bank does, and I will have to declare the
interest they pay me as interest received just like I do for interest
received on a CD.

Thanks for all the warnings, I didn't get to the position of giving
them a mortgage without having some $$$$ smarts.

hr(bob) wrote:
....
Thanks for all the warnings, I didn't get to the position of giving
them a mortgage without having some $$$$ smarts.

Even if grant that to be so this has far less to do with the money
itself but using professional help to handle a transaction to ensure it
is executed properly and nothing is left uncovered. I still say the
S-I-L would be an idjit to enter into the agreement w/o representation
as you would be to make it w/o competent assistance. Only some of the
issues that I can foresee include title search, etc., disclosure rules
applicable in your jurisdiction, potential for hazardous material
liability, and on and on that the folks who do this routinely are well
versed in and you aren't even aware of.

That's not intended to be an aspersion against either party. If you
would consider entering into a real estate transaction on your own w/o
representation, I would only invite you to listen to Bruce Williams
evening talk show for a while to hear of the tales of woe that have
arisen owing to such penny-wise, pound-foolish actions of
others...something of this nature is even more likely to have pitfalls
for the unwary.

--

On Thu, 6 Mar 2008 08:36:51 -0800 (PST), "hr(bob) "
wrote:

On Mar 6, 9:29Â*am, dpb wrote:
JoeSpareBedroom wrote:
h wrote in m...

...



Plus, the son cannot take any mortgage tax deductions, since it won't be a
mortgage, just a loan.
...
I'm not so sure about that. What makes a loan a mortgage? What it's used
for, or who you get the loan from? ...

What makes a loan a mortgage is what the collateral is. Â*If the
collateral is the property, its a mortgage. Â*Mortgage interest on
primary and/or secondary is deductible irregardless of the payee.

But, it needs to be structured properly for this and other enumerated
reasons and shouldn't even be considered w/o proper legal representation
for each party...

--

I am going to have a regular mortgage on the property, the land and
the house are the collateral for the oan, just like as if I were a
bank. I will have to issue a 1098 form to them for the interest paid
each year just like a bank does, and I will have to declare the
interest they pay me as interest received just like I do for interest
received on a CD.

Thanks for all the warnings, I didn't get to the position of giving
them a mortgage without having some $$$$ smarts.
================================

There may be a better solution I remember from a long ago Dear Abby
column. That one dealt with a businessman's SIL and his daughter who
wanted to forget college and start a "surefire" business right away
with her daddy's money. Daddy was quite willing to put up the money
and didn't even mind losing it all. Having young people with
creditable ambition was worth his support. But he was wary of their
ability to handle real world business problems.....and he didn't like
the idea of being taken as an easy touch.

His solution was to provide a personal guarantee for them to get a
personal bank loan. The bank would be the best and an independent
authority to assess the viability of their business plans. And the
bank would be the best authority to enforce regular repayment. If the
business failed that guaranteed amount would be all he would lose.
Its only money. That business experience and discipline would be worth
far more than any college degree can endow. If the young entrepreneurs
could not keep acceptable business accounts and make the necessary
payments leading to failure their creditworthiness would be damaged.
That would be a far more effective incentive for them to do things
correctly than he can possibly devise.

From what I can deduce the mortgage is due for renewal and a whopping
rise in payments is imminent as a result of the subprime crisis. The
best solution for your son-in-law and daughter may be to get a bank
loan to pay off the mortgage in full. With you guaranteeing the loan
they should get an affordable and stable fixed rate their income can
handle. The bank will enforce repayment as per terms. If they
default you get to pay up the balance. Their credit record may tank
but they still get to keep the house and family intact. All you lose
is money. By then it will be worth any amount of money to keep your
daughter's family still dear to you. Don't sweat the money. Or if you
still want security get that signed but undated bill of sale I had
suggested. By guaranteeing the bank loan you don't have to disturb
your current investments and savings arrangements. You don't have to
hire lawyers to do expensive paperwork. You won't have to go to court
if anything goes south. You may need an accountant or financial
planner for independent advice.

Or heck. Why don't you pay off the mortgage to buy over the house.
You have clear title. Rent it back to you daughter for the same amount
as a bank loan repayment with interest. Have an agreement whereby
should they want to buy back the house their rent payments will offset
the sale price less whatever interest amount agreed on. An accountant
will be needed to figure out the details. You can use the bank loan
figures as a guide.

Good luck.

On Thu, 06 Mar 2008 19:07:24 GMT, PaPaPeng wrote:

Or heck. Why don't you pay off the mortgage to buy over the house.
You have clear title. Rent it back to you daughter for the same amount
as a bank loan repayment with interest. Have an agreement whereby
should they want to buy back the house their rent payments will offset
the sale price less whatever interest amount agreed on. An accountant
will be needed to figure out the details. You can use the bank loan
figures as a guide.

Right. When he pays off the mortgage they can execute a Quitclaim
deed and record that and the OP has Title.

Draw up a Lease purchase contract with details. Pops is now the bank!

The question is better suited to misc.legal or misc.legal.moderated,
but I'll answer it here. I have a private mortgage. The term "Seller
financing" on a house for sale means the seller will consider giving
the buyer a private mortgage. It can be a good deal for both parties.

You need 2 forms, Mortgage (aka Security Deed) and Promissory Note.
Using FannieMae / Freddie Mac Uniform Instrument (so called FNMA)
versions of these will make it easy for all parties; a uniform
mortgage is, well, uniform. You can get the forms an old-fashioned
stationery store, the kind that sells forms! Or online: there are
many sources. I got my forms (FNMA) online from uslegalforms.com .

A mortgage is a mortgage is a mortgage, for legal and tax purposes.
5% is well within bounds of market rate and thus does not qualify as
a gift.

Una

On Mar 6, 6:23*pm, (Una) wrote:
The question is better suited to misc.legal or misc.legal.moderated,
but I'll answer it here. *I have a private mortgage. *The term "Seller
financing" on a house for sale means the seller will consider giving
the buyer a private mortgage. *It can be a good deal for both parties.

You need 2 forms, Mortgage (aka Security Deed) and Promissory Note.
Using FannieMae / Freddie Mac Uniform Instrument (so called FNMA)
versions of these will make it easy for all parties; *a uniform
mortgage is, well, uniform. *You can get the forms an old-fashioned
stationery store, the kind that sells forms! *Or online: *there are
many sources. *I got my forms (FNMA) online from uslegalforms.com .

A mortgage is a mortgage is a mortgage, for legal and tax purposes.
5% is well within bounds of market rate and thus does not qualify as
a gift.

* * * * Una

Thank you Una!!!

You are the only person who responded correctly with the names of
Promissory Note and Mortgage. I posted my original question after
finishing doing the income taxes for an individual who runs a home
business, owns three homes, and also works outside of the home and a
second semi-retired couple who have a large variety of investments and
some weird expenses.

I was hoping for someone to say promissory note and mortgage, which is
what I thought, but didn't want to prejudice any responses.

To everyone else, thanks for taking the trouble to respond, I am well
aware of the pitfalls and there will be language used to make it clear
what happens in case of default, death on the part of any of the
signatories,etc. I have the forms and am now tailoring them to our
particular circumstances.

H. R.(Bob) Hofmann

On Thu, 06 Mar 2008 06:28:07 -0800, Smitty Two
wrote:

In article ,
Phisherman wrote:

You have to consider what happens when
your son-in-law/daughter can't pay.

That's easy. He forecloses on them, and since they're now homeless, they
move in with Dad.

Can't they stay in that other house that Dad owns now?

In article ,
mm wrote:

On Thu, 06 Mar 2008 06:28:07 -0800, Smitty Two
wrote:

In article ,
Phisherman wrote:

You have to consider what happens when
your son-in-law/daughter can't pay.

That's easy. He forecloses on them, and since they're now homeless, they
move in with Dad.

Can't they stay in that other house that Dad owns now?

Nah, that's going on the auction block at the courthouse steps.

On Mar 6, 10:10*pm, "hr(bob) "
wrote:
On Mar 6, 6:23*pm, (Una) wrote:





The question is better suited to misc.legal or misc.legal.moderated,
but I'll answer it here. *I have a private mortgage. *The term "Seller
financing" on a house for sale means the seller will consider giving
the buyer a private mortgage. *It can be a good deal for both parties.

You need 2 forms, Mortgage (aka Security Deed) and Promissory Note.
Using FannieMae / Freddie Mac Uniform Instrument (so called FNMA)
versions of these will make it easy for all parties; *a uniform
mortgage is, well, uniform. *You can get the forms an old-fashioned
stationery store, the kind that sells forms! *Or online: *there are
many sources. *I got my forms (FNMA) online from uslegalforms.com .

A mortgage is a mortgage is a mortgage, for legal and tax purposes.
5% is well within bounds of market rate and thus does not qualify as
a gift.

* * * * Una

Thank you Una!!!

You are the only person who responded correctly with the names of
Promissory Note and Mortgage. *I posted my original question after
finishing doing the income taxes for an individual who runs a home
business, owns three homes, and also works outside of the home and a
second semi-retired couple who have a large variety of investments and
some weird expenses.

I was hoping for someone to say promissory note and mortgage, which is
what I thought, but didn't want to prejudice any responses.

To everyone else, thanks for taking the trouble to respond, I am well
aware of the pitfalls and there will be language used to make it clear
what happens in case of default, death on the part of any of the
signatories,etc. *I have the forms and am now tailoring them to our
particular circumstances.

H. R.(Bob) Hofmann- Hide quoted text -

- Show quoted text -


Your much too kind Bob. Many of the answers here were completely
incorrect. Starting with the claim that a private party can't issue a
mortgage to another private party. Or suggesting transfering
title. Or adding you as a co-signer on the loan, etc. None of
those does what you want to do, which is replace the current mortgage
on your daughter/SIL's house with one you give them.

Certainly you can do it and have it recorded properly. I would
suggest that if the interest rate is going to be any significant
amount lower than the prevailing market rate that you check with a tax
advisor. The post suggesting possible IRS issues with below market
loans is correct. As far as the forms, personally, I'd contact a
couple lawyers and ask what their flat fee would be to do this for
you. Should only cost a couple hundred bucks and for me it would be
worth it to have it done right. Alternatively, if you check at the
local hall of records, they can probably point you to the forms/
procedures for recording the new mortgage.

Of course, as others have pointed out, doing this could someday get
messy if their situation changes and they miss payments, get divorced,
etc. As long as you understand the potential problems, there is no
reason you can't do what you want to do. It's done all the time.