Options available to keep owner out of foreclosure on house

So basically this is a friend of the family that is having difficulty with his house. I’ve talked with him and he wants to keep it. More or less at this point, I just want to get options available for him.

Here’s the situation:

His father passed away and left him a house. Before he passed away, he took out an equity loan of around 70k or so. When he passed, this guy transferred the house to his name and now the bank is coming after him for payments on this equity loan (which he hasn’t been paying for like 6 months). The bank is starting to ask for the money and sending him letters.

He is telling me as a last resort, his brother will put down all 65k cash to pay the equity loan but wants alot of interest ballooning, etc…

What options are available to him to save his house? What are options available for me in working with him (if any)?

I asked him if he’s talked with the bank to try to work out payments and he said he thinks they want it all lump sum? He’s also not sure at this point how much time he has to come up with money out get kicked out. If it comes down to it, I can buy the house or he can finance through his brother, but he doesn’t want to sell right now. His credit is terrible and he has nothing for down. Appraised value and comps are 140k. The house is paid for and according to him doesn’t really need much for repairs.

If the house were paid for, the bank would not be threatening to foreclose. The father used the house as collateral for a loan. I am surprised that the probate court allowed title to transfer without satisfying the lien, or, did probate actually happen? If there was no probate, how did the family friend execute the deed to transfer title?

If he can’t afford to make the payments on the existing loan, then he can’t afford to keep the house. His options are

  • Sell
  • Refinance
  • Let the property go to foreclosure

If the family friend does not want to sell the house, then is there something else of value that can be sold to pay off the debt? What assets were in the estate that can be liquidated to pay off the debt?

Refinance as a primary residence could be cheaper than maintaining the existing financing. As a rule, home equity loans carry a higher interest rate than a purchase money mortgage loan. If the family ffriend can’t use traditional lenders does he have an insurance policy or a 401K he could borrow from?

The family friend needs to be aware that if he does nothing, he risks losing the house to foreclosure. It may take awhile in this market for the foreclosure process to complete, but there is a chance he could continue to occupy the house rent free (with the lender’s consent) for up to a year while the property is pending foreclosure.

Yea that’s kind of what I expected to hear, I just wanted to make sure there was nothing else that could be done or I could look into.

Thanks for the help Dave!


The VERY LAST THING I would do is loan this guy money or buy the house for him and expect him to pay you. His credit score is a measure of his financial trustworthiness and he clearly doesn’t appear to be very trustworthy. Loaning him money or buying the house and expecting him to pay you back will only destroy your friendship when he doesn’t pay. I’d stay FAR away from this problem!


You called it Mike… I appreciate your concern. It sounds like you’ve been in this situation before? I was first approached about this house like “I’ve got a way to make alot of money and I’m thinking to give you 10% of the profits if you loan me the money”.

Behind the scenes what he’s really saying is, “I’m in foreclosure denial and about to lose my house/equity for being 6 months behind in payments and ignoring my financial problems.”

There’s potential for a deal if he’ll sell it (which he doesn’t want to do but may not have a choice if there’s even time for that). Sold comps are at 140k average and in a desirable area. Haven’t checked rental comps yet

It’s definitely worth consideration if he is willing to sell outright and vacates the property. It sounds like the equity is there. You could even offer him a bone like a small percentage of the equity so he could start over renting somewhere else.