I had an interesting conversation yesterday with Larry, one of the local probate attorneys here in L.A. After chitchatting about baseball and the Dodger’s chances of making it to the World Series, he shared with me how some of his clients have been stuck with a non-rent paying tenant in a house that they inherited.
The keyword here is stuck because nobody is getting paid! Larry the attorney can’t get paid, the creditors can’t get paid, and the inheritance can’t be distributed to the heirs all because they are stuck with a house that has not been able to be sold due to the eviction moratorium.
Fortunately, Larry’s clients have been protected by a foreclosure forbearance plan that have paused all mortgage payments. But the timer on this ticking time bomb has been quietly counting down over the past months and now the time has come where the payments are resuming for many homeowners and as a results foreclosures and sales are sure to follow.
But Larry and his clients aren’t the only ones dealing with these ticking time bombs.
A variety of bill’s throughout the country have been passed requiring lenders to provide a forbearance plan to landlords with qualifying loans and who are experiencing financial difficulty due to a tenant’s inability to pay rent.
According to the Mortgage Bankers Association, as of this August over 1.6 million homeowners nationwide were in forbearance.
These heirs in a forbearance who are stuck in probate with tenants in these houses can’t refinance their loans to take advantage of historically low interest rates and lower their monthly payments so that they can keep the house as a rental property.
So what does this all mean for a person who has inherited a rental property? It’s a literal “catch-22” leaving them with only one option.
The most logical option is for them to sell the house. And this is where you come in because
There are still 1.6 million borrowers in forbearance programs
98% of those heirs have at least a minimum of 10% equity in these homes.
The shortage of inventory on the market has continued to push home prices up and so the level of these heirs home equity also has gone up from a little over $6 trillion at the start of the pandemic to just over $9 trillion today.
Americans across the country are having to face a lot of problems. Grocery prices are going through the roof, people can’t afford to fill their vehicles with gas, there are shortages on just about everything people need.
Although you may not be able to do much about skyrocketing prices and shortages, you can do something to help these inheritors who have found themselves in a pickle.
Committed to your success,
Ernie “Getting People Out Of Pickles” Vargas | The Probate Fox