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Deed holder Vs. Mortgage Holder

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marc2012

Junior Member
What is the name of your state (only U.S. law)? NYS

Is it possible to transfer a deed while still having an outstanding mortgage on the property? Meaning can there be a different legal owner from the mortgage holder? (for IRS purposes). When the house gets sold/foreclosed in the above situation who has to record the sale? Will the mortgage holder be able to claim insolvency in the case of 1099-c income because he has no assets since the deed is in someone else's name?

Thanks
 


tranquility

Senior Member
The transfer will not protect the property from the already recorded mortgage.

The transfer can be undone if within a certain amount of time from BK filing.

So, while the answer to your question is yes, the answer to your real question is that that does not do what you think it will do.
 

HomeGuru

Senior Member
What is the name of your state (only U.S. law)? NYS

Is it possible to transfer a deed while still having an outstanding mortgage on the property? Meaning can there be a different legal owner from the mortgage holder? (for IRS purposes). When the house gets sold/foreclosed in the above situation who has to record the sale? Will the mortgage holder be able to claim insolvency in the case of 1099-c income because he has no assets since the deed is in someone else's name?

Thanks

**A: sounds an old scam strategy that will not work.
 

FlyingRon

Senior Member
Yes, you can, but if the mortgage has a due on sale clause in it, it may trigger that.

What "IRS" purpose did you have in mind. If the mortgagee forgives the loan, the mortgager is the one who receives the potentially taxable forgiveness. Once the foreclosure happens, you don't own the property anyhow so deeding it away in advance isn't going to make much difference. Further, you probably lose the Qualified Personal Residence exclusion (do to expire at the end of 2012) if you give the property away first.
 

nextwife

Senior Member
BTW- the "mortgage holder" is the party that OWNS the mortgage, not the party that owes it.

Transferring the property without paying off the loan is likely a violation of the terms of the note (unless the party that owns the mortgage has agreed to a short sale), and will not change the borrower's obligation under the note.
 

justin1

Junior Member
Mortgage

What is the name of your state (only U.S. law)? NYS

Is it possible to transfer a deed while still having an outstanding mortgage on the property? Meaning can there be a different legal owner from the mortgage holder? (for IRS purposes). When the house gets sold/foreclosed in the above situation who has to record the sale? Will the mortgage holder be able to claim insolvency in the case of 1099-c income because he has no assets since the deed is in someone else's name?

Thanks

Changing the deed will affect the mortgage. Changing a deed implies creating just a new one. You can't cross one off if you want to add someone's name in the deed. So, this step should be taken with utmost care. So, transferring a deed while still having mortgage on the property seems very difficult, and it is not recommended by most of the professionals.
 

Proserpina

Senior Member
Changing the deed will affect the mortgage. Changing a deed implies creating just a new one. You can't cross one off if you want to add someone's name in the deed. So, this step should be taken with utmost care. So, transferring a deed while still having mortgage on the property seems very difficult, and it is not recommended by most of the professionals.


Please pay attention to the date of the last posts.

Necroposting is considered poor netiquette.

Thanks!
 

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