A home loan refinance problem

Question

I have owned my home for 19 years. I purchased the property on my own with no co signer. About 9 years ago I had some credit issues due to an ugly divorce. I refinanced my home and quit claimed the deed to my parents, a year later my parents quit claimed the home back into my hands but remained the mortgage holders. I have always made the payments on time. About 9 years ago I called the lender and asked to switch the mortgage taxes and insurance to be deducted from my personal checking account, not theirs. My parents were not signers on my account and no questions were asked from the lender.

Monthly payments have been coming out of my account all these years. Never once late. My father passed about 8 years ago and my mother 3 years ago. I never felt the need of thought I had any obligation to inform the lender of their deaths.

Just recently I received a letter from the lender saying they received notice of my parents deaths. I have not replied yet because I'm fearful they will make me refinance. I became disabled 10 years ago but am managing on SSI and odd jobs under the table to make ends meet. I repeat, the mortgage payments have always been current. Now my friend is willing to co sign on a refi because I have not filed tax returns for 6 years. I have never earned enough to have to.

If my friend agrees to co sign on a new loan will he be able to quit claim the deed back into my name? I have generous friends who have helped me through loans and gifts.

But is it legal for him to quit claim the house back to me as my parents did 9 years ago?? Or does his name even have to be on the deed at all? Thank you for any advice. I just assumed the lender would be happy getting timely payments.

Answer 1

The bank probably screwed up by not calling on the loan when your parents quit-claimed the property to you. They should not have allowed this arrangement, and they finally caught up with you and are doing what they should be doing to protect their interests - calling on the loan due to the change of ownership (although it was the death that triggered it).

So you have to refinance, since the old loan is being called on.

Your friend, by quit-claiming the house back to you, may trigger the exact same situation. Change of ownership will lead the bank to calling on the loan.

I think your best course of action would be to refinance on your own, or have your friends pay off the loan for you and you pay them back as a private arrangement.

As to the tax returns, you can back-file them, if all the bank needs is just having them filed. If you don't have to file tax returns, it doesn't mean you're not allowed to.