Let me get this straight...
You put your kids on title?
Before anyone jumps to retort how wise that may be and tax or death benefits to say... "whats wrong with having kids, especially your own, on title"? Let me get to the facts of this TRAIN WRECK that I had to be the bearer of bad news to our crying borrower who was given HORRIBLE information from an attorney that actually caused her to lose her home several years ago.
We used to do wholesale lending in addition to our retail production. (yes this was pre 07 before the feds helped collapse the secondary markets)
During this time I took a loan from a broker in FL who was trying to help save a lady's home and the deal seemed in line. Appraisal looked strong, ability to repay was OK, credit not so much but I mentioned this was pre 07 so not that big of a deal, unlike today, and when trying to clear title we ran into an issue. What could it be you ask? Let me tell you the story...
A buyer who was already behind on her home was looking to get current and get a fresh start. In a horrible chain of events she hired an attorney to help her "PROTECT" her assets, as she feared losing them from going through a rough patch and was being threatened with foreclosure on her home. The attorney advised her to add her kids to title?
OK, so you all know, the title and who is on it DOES NOT keep your creditor/lender from foreclosing!
Next the addition of your kids on title is ONLY a possible death/tax and probate benefit (which also could be attained from a trust but thats another story) title is NOT a way to protect it from foreclosure!
In any normal scenario we could have simply done a QCD (quit claim deed) to remove the party not on our loan and move forward but in this case the kids on title were MINORS! Yes 3 and all of them UNDER 18!
So what happened next? The kids could not remain on the title because they are not part of our loan. Also they could NOT be removed from title as they were not of legal age to have their signature requesting it to be valid!
To try to get this to the courts and a special judge ruling on it to be able to remove the minors (which is what has to be done) would take months or longer and this lady did not have that kind of time.
The result... in a failed attempt to protect her home she guaranteed the loss of it by prohibiting her ability to refinance and ultimately lost her home to foreclosure that could have been avoided (or worst case delayed we never know if a person who gets help will be able to sustain payments and a good example of this is the amount of people bailed out in modifications that go right back into default).
Before you do anything seek counsel of a quality and seasoned REAL ESTATE ATTORNEY! And then if something doesnt seem right it doesnt hurt to ask for a second or maybe third opinion to be sure.
NEVER add a minor to the title of your home unless you know for a fact you will not need to refinance it or sell it (yes that was blocked to, as the minor could not legally enter into a sale agreement either!) and if you want to ensure they are protected seek the counsel of an estate planner to accomplish that goal.
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