What It Means to Be 'In Escrow'

The best way to accomplish your goals and your parents' goals is to deed the house title into their revocable living trust. Your parents can name you as the successor trustee if they pass on or become incapacitated. Until then, they control the property as they now do, including selling or refinancing it.

Holding title in a revocable living trust avoids probate costs and delays, allows you to distribute the living-trust assets if your parents die first and gives you a stepped-up basis to market value after they both pass on. For more details, please consult a lawyer who specializes in living trusts.

DEAR BOB: Our question pertains to Internal Revenue Code 121. In order to receive the $500,000 exclusion, we understand, both spouses must occupy the principal residence at least 24 of the past 60 months before its sale and IRC 121 can be used only once every 24 months. Can the home be titled in just one spouse's name? -- Linda D.

DEAR LINDA: Yes. Although I think it is best to have the names of both spouses on the home's title, IRC 121 requires that title be held in only one spouse's name. I like having both spouses' names on the title because then, no matter which spouse dies first, the surviving spouse gets the benefit of a stepped-up basis to market value.

For example, suppose only your name is on the title to your home, but your husband dies first. Because his name wasn't on the title and you didn't inherit anything from him, you would not receive any stepped-up-basis benefits.

DEAR BOB: My mortgage company continued to send me monthly payment statements during my bankruptcy and even after the bankruptcy was discharged. Then they stopped. When I called, a representative admitted the mistake. Did my mortgage company violate any laws? -- Robert G.

DEAR ROBERT: It appears that your mortgage company should have discontinued sending you monthly statements while you were in bankruptcy, presuming the lender was informed of your bankruptcy filing.

However, the mortgage company is a secured lender, so you still owe the money and you were not discharged of mortgage debt in the bankruptcy. I suggest that you forget the matter.

DEAR BOB: Can a mortgage lender force me to use a specific appraiser when I am removing my PMI? -- Dave W.

DEAR DAVE: Yes. However, if you don't like the appraiser's evaluation of your home's fair market value, you can hire your own licensed appraiser and contest the lender's appraisal.

Whether you are removing PMI or obtaining a new mortgage, the mortgage lender always selects the licensed appraiser. As a borrower, I've often been asked by mortgage lenders if I have a preference for a specific appraiser. Usually I don't.

I suggest that you speak up if you have a preference for a specific appraiser or you think the appraiser selected by the lender is incompetent. However, be aware that many mortgage companies hire appraisers through major nationwide appraisal management firms at negotiated fees.