Parents are great arent they? My sister and her husband didnt qualify for a home loan on their 150,000 home in Mansfield, OH a few years. For good reason considering they arent much good at personal finances. So mom gets a mortgage in her own name two states away. Sis pays the mortgage directly and lags two months behind consistiently for that past 4 years. Now that the market has slowed there is 133000 left to pay and the home likely is only worth about 110,000. What to do? I thought my parents might get out from under if they negotiated a short sale or did a deed in lieu of foreclosure. But what worries me is the bank might balk at that, since my parents do in fact have liquid assets and might be forced to sell their own home and assets to pay for their mistake of doing a mortgage for their daughter. Im thinking the bank is going to just say, tough luck we know you can afford to pay this mortgage. God forbid if one of my parents passes, we would have to liquidate the homestead in Illinois to pay for the great Ohio mistake. Any ideas how to rescue my parents before they head for the retirement home?

Sad. It sounds as if your mom is lucky your sister is making the payments at all.

Unfortunately if sis has been 1 or 2 months late each time it has almost certainly had a negative impact on your/her mom's credit rating.

If your sis and her hubby are unable to refinance in their name you mom might consider starting to make her own house payments in a more timely manner and let your sister send her the payment when she gets around to it.

That way you mom can start to repair her damaged credit and at the first opportunity get your sis and company to get their own mortgage to be late on.

Would your parents try to sell the property with your sister and her brood still living there??

I don't see much potential for a short sale here since your parents have other assets the bank could go after.

Best bet is to get sister and husband refinanced with their own mortgage.

Im sure my parents credit has a least lost 120 points. My dad always threatens to list it for sale, but likely relaized it wont move very fast and backed off from that. I heard that there is loan for everyone and they do earn close to 100k/year. Nothing wrong with subprime. I had to take one with my 770 credit simply because the lenders didnt like the idea I earned my salary from an overseas corporation.

My parents with assets in RE, stocks and cash etc reinforced my worst fear. The bank is going to compliment them on the parental love and say now sell the farm and pay up like we know you can.

They are in their 70s and if the depart before sis officially purchases the home with her own loan, Sis will probably be the only one who ends up with a home free and clear.

I wonder if the current mortgage holder would have the most interest in extending a subprime loan since they already hold the title to the home. I doubt they will bother to repo it unless it is farther behind or lacks any equity.