Q: Three years ago, I signed an assumption deed to my brother because I was getting married and would be living in another state.
Earlier this year, my nephew talked my brother into signing a quit claim deed to him. Our nephew knew that there is a lien on the house and that the house was still in my name. The following week, he contacted me and told me that he would be getting a loan to pay off the house and get the title out of my name.
Well, the nephew got the quit claim deed in his name and has not tried to contact me since. I have tried numerous times to ask him to deed the house back to me. He will not return my calls. I also contacted the mortgage company and told them what has happened. They told me that since my name is on the loan and my name was on the title, they will not release the lien to him. They will only release the lien and title to the house in my name. What do I do? I am desperate because I am making the payments to keep the house from going into foreclosure. I feel like I am paying for a house and property for my nephew instead of for myself.
I feel violated. (And I helped raise this boy.)
A: Let’s start at the top: You owned a house and had a mortgage on the home. When you moved out of state, you transferred title to the home to your brother and had him sign a document that said he also assumed the mortgage on the home.
Your brother in turn transferred title to the home to your nephew and did not agree to assume the mortgage and has not been making payments on the loan.
When a person takes out a loan and that loan is secured by their ownership interest in the home, that person remains responsible under that loan until the loan is paid off. So when you financed or refinanced your home, the loan was in your name. It doesn’t matter that your brother or anybody else tells you that they have assumed the obligations. You remain liable for the debt unless the lender releases you.
The assumption agreement made your brother responsible to you for the debt you originally took out but you were still responsible to the lender. I assume that your brother made payments on the loan and that everything worked out for some time.
When your brother decided to transfer his interest to your nephew, he thought he was washing his hands of his obligation to you and he may have stopped paying on the loan. Now your nephew is living in the home and does not make any payments and now you have had to step in to make the payments to avoid having the property go into foreclosure.
You indicated that the lender told you that the loan is in your name and the title to the home is in your name, but the information the lender may be giving to you may be information from the time you obtained the loan from them. From your letter it seems more likely that you are still on the hook for the loan but the title to the home has now gone from you to your brother to your nephew.
You’re in a bad position. You don’t own the home but are still responsible for the loan payments.
If your nephew won’t call you, is there anybody else in the family that can get him to undertake the responsibility of having him get his own loan and pay off your old debt. You have to find a way to get your brother–the person that assumed the obligation to make payments on the debt–or your nephew to pay the debt off by refinancing the debt or by selling the home and paying off the debt.
If using the family contacts does not work, you should talk to a real estate attorney to determine what rights you might have under the assumption agreement. That agreement may give you the right to go after your brother for the payments but may also give you the right to get title of the home back in your name. If you can get title back in your name, you can sell the home to pay off the debt.
Please consult immediately with a real estate attorney.
July 10, 2008.