Finding the Silver Lining in Foreclosures

You should also consider paying off your mortgage if you're heading into retirement or into a period of your life where your cash flow will decrease. If you don't have to make that payment each month, it can help smooth out your budget and provide you with more resources to do other things.

Finally, if the interest rate on your loan is higher than what you're earning on the cash, then you should consider refinancing your mortgage or paying off the loan.

Can you live in one state and claim residency in another? Our home is one mile from the state line, but we want to claim residency in the other state.

If you live in one state, you can't claim residency in another. You can split the time you reside in one state or another. But if you own a home, vote in your district, have a driver's license from the state, receive mail at your home, send your children to school and consider one state your home, you can't simply "claim" residency in another state. Even if that state is one mile away.

My younger brother spent a year working for a mortgage company that helped people whose homes were in foreclosure. He ended up putting 10 houses in his name in the hope that these people would pay him and then buy back their houses after a year.

This hasn't happened, and my brother had to leave the business because of financial problems. He figures that the owner of the business has stopped paying the investors who own the loans and that they are now calling him because they can't reach the real owners of the properties.

My brother is fearful of a lawsuit. We own a cottage together. The cottage is in his name, and we split the payment and upkeep 50/50.

We're afraid that these investors may try to take our cottage. My brother mentioned doing a quitclaim deed that would put the cottage in my name. The mortgage would be in his name alone.

Would this protect our cottage? Have I given you enough information to help us?

You have given me probably too much information. Your brother should have known better than to take title to property he did not own.

If the owner of the mortgage business wanted to have the title to the homes, the title should have been in the owner's name or the owner's company's name.

There are people in the marketplace who claim to help homeowners with their financial troubles but who are really only out to make money for themselves at the expense of distressed owners.

Some companies claim that if a homeowner is in financial trouble, the owner can transfer title to the home to the company. Then, when they get back on their feet, the company will, for a small fee, transfer the title back to them.

But in practice, the homeowners are wiped out of any interest they have in the home, and the so-called helpful mortgage company either resells the property or refinances it, taking all the equity out of it.

There's a name for this scam: It's called mortgage-rescue fraud, and the Federal Trade Commission and the FBI are concerned about the proliferation of such schemes.

It seems that your brother might have participated in that type of venture. A legitimate business would never place title to homes in the name of an employee. Your brother's bigger issue is, perhaps, having participated in such a scheme and having the authorities come after him. He should seek the help of a lawyer immediately.

With respect to the cottage, the quitclaim deed transfer is not likely to work. If your brother has creditors coming after him, the cottage is at risk. If he transfers title to you, the creditors will have time to unwind the transfer to you. When a debtor tries to get rid of assets right before a creditor has a right to those assets, the transfer itself can be a fraud against the creditors.

If you help your brother by taking title to the cottage, you may find yourself in hot water, too. Because the cottage is in his name, it is presumed to be his. The fact that you share expenses is irrelevant.

To learn about other options that may be available to you, please talk to a lawyer.

Ilyce R. Glink is an author and nationally syndicated columnist. Her latest book is "100 Questions Every First-Time Home Buyer Should Ask." Samuel J. Tamkin is a real estate lawyer in Chicago. If you have questions for them, write Real Estate Matters Syndicate, P.O. Box 366, Glencoe, Ill. 60022, or contact them through Glink's Web sites, http://www.thinkglink.comandhttp://www.expertrealestatetips.net.

Copyright 2008 Ilyce R. Glink and Samuel J. Tamkin

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