What do I do with my parents and their weird divorce/mortgage situation?
April 25, 2016 7:59 PM   Subscribe

My mom cant pay her own bills after her divorce and me having to pay hers is slowly driving me crazy because I've lost my freedom and flexibility. We have a weird mortgage situation that essentially expires in 2 more years, but I want to resolve it sooner than that so I can move into a new apartment and just feel less stressed. What do I do?

My mom and step father got divorced a little over 3 years ago; he was abusive and controlling and didn't allow my mom to make her own decisions, make friendships, build herself up or even have a career. He told her not to take a job and so she was basically a housewife for the last 10 plus years.

Fast forward to today and my mom has been out of the work force for too long with little to no experience and is having a hard time finding a job. She has a lot of low self esteem from the abuse and not being able to get any job has been damaging her confidence -- even though its likely the fact that LA market is notoriously a bad for employment.

I encouraged her to try Uber and Lyft since she likes to drive and it would be good to network, but whenever I talk to her about helping me find a car for her to drive, she only wants nice cars and won't really work with me on finding a reasonable car. So that's been a dead end even though I keep pushing it. My budget is closer to $8-10k max and she wants something 15k-20k range.

It would really help me a lot if she became independent again and paid her own bills.

The real issue is that as part of their divorce, my mom was awarded the house they were living in in the outer Los Angeles area, while he kept another house which was supposed to be his eventual retirement home in the Houston area.

My step father, unfortunately, bought the Houston house by taking out a second equity loan on the first house; but in their divorce settlement he agreed to pay off the second loan within 5 years. Because of this we're stuck with a crap interest rate and our paying a premium on the mortgage until the second mortgage is paid off. I'm paying 2k a month on a loan that would only be only 1k a month if we were able to refinance it -- as well as a majority of her bills, repairs, and various other expenses, which eats up more than half of my monthly pay.

When it comes to paying my bills, I have hardly any money left over at the end of the month and my credit card has started to get close to maxing out.

You can see how this is becoming a conundrum...

I tried to call a couple of my banks, I make 100k+ and have good credit, but the minute I bring up the second mortgage issue the freaking brokers or whatever go crazy as if it's some deadly virus we're discussing -- they actually lose their minds. It got so bad that I tried to have them just me through the basic refi of the first before I even mention the second -- but still same problem. Like their little minds just cant wrap their heads around the situation...

In any case -- high level the numbers look like this:
Mortgage 1 - remaining mortgage is 250k, monthly payment 2.2k
Mortgage 2 - remaining is 82k, (of which my step father is only paying the minimum of $700)

(At the rate he's paying the second, it wont be paid off in the years he has left, so he'll either have to come up with the money or sell the other house in less than 3 years.)

Paying this 2k mortgage every month is killing me slowly, and I've been doing it painfully for the past three years. I have just enough savings to kind of cover it for the last two (worst case) but it just feels bad all around.

So what do I do?

When I was finally able to talk to a sane person at the bank, they said that they'd have to "subordinate the second loan" -- which I think means they have to "promise it will be paid" to the second mortgage company or otherwise guarantee their part of the mortgage without including the second mortgage in the refi -- which for some reason seems like some huge taboo impossible thing they way they describe it. It would have to go to an underwriter and then theyd charge me some refinancing fee (which works out to about 12k) -- so this would help us lower the interest rate on the first I believe. Not sure how the subordinating aspect of it works. But they said I'd have to live in the house for a year --- which I live 700 miles away, but I am on the title of the house.

The issue is we dont want to refi the first and second mortgage together because it creates this weird situation where we end up being liable for what he actually owes -- this seems to be the same problem if we decide to sell the house. He could essentially just not pay it -- so at minimum we'd need a way to guarantee and enforce the part he would still owe my mother (roughly 84k), but not sure if this is something that would need to go through an accountant or lawyer or if we'd need some kind of lean or something to establish us as a priority debtor.

So what should I do? My mom cant pay her own bills and me having to pay hers is slowly driving me crazy because I've lost my freedom and flexibility.
posted by nodebunny to Work & Money (14 answers total) 1 user marked this as a favorite
What would happen if you stopped covering the mortgage for her? Would she have to sell the house? Is that necessarily bad?

Also, you are making it really easy for her not to work. Does she have any income? What happens if you tell her you'll only pay $1000 next month and nothing after that? Would it force her to get a job?

On some level you are enabling her helplessness. That's probably hard to hear, but what would she do if you weren't around? Is it possible that taking care of herself -- rather than depending on you -- is what she needs right now?
posted by bluedaisy at 8:16 PM on April 25, 2016 [5 favorites]

How bad is your relationship with your (ex?-)step-father?

And how good/bad is his interest rate on that equity loan?

The thing that would be great for you and your mom would be if he could be convinced to take out an equity loan on the Houston house now and use it to pay off the 2nd mortgage on your mom's house.

If your relationship is good, maybe he could be convinced this is just the right thing to do?

If your relationship is not so good, maybe the numbers work out so that he'd be saving money by getting this new mortgage now vs. waiting five years when interest rates will almost certainly be higher?

But apart from that issue, her not being willing to take your gift of a $10k car(!) because it's not as nice as what she wants sounds like stalling, pure and simple, and so I agree with bluedaisy that maybe you should try telling her you can't support her indefinitely.

(Also, isn't theirs the kind of marriage that alimony was invented for?)
posted by nobody at 8:33 PM on April 25, 2016 [2 favorites]

Yes, you are enabling her. She has learned to be helpless, and the only way out is to help herself.

She needs to sell the house. The house needs to go on the market within a month. Help her with the car, and be willing to go another $2000 more if YOU feel that puts you into a slightly better car/more reliable.

Script: Mom, I love you, but you need to start taking charge of your life. I will help you with the mortgage for one more month and that is all unless you list the house. After that, I can do one more month, but you will have to help cover from that point if it doesn't sell.

Mom, I've found a couple cars for you to look at if you're serious about driving. If you don't want them, fine, but I will no longer be able to support you if you don't find a job of some type. I can help you for one more month, but after that, you need to apply for assistance or apply for the food bank.Let's call around and see if there are any possibilities for job training.

Working in a thrift store sucks, but they'll hire just about anyone with a work ethic.
posted by BlueHorse at 8:35 PM on April 25, 2016 [6 favorites]

I encouraged her to try Uber and Lyft since she likes to drive and it would be good to network, but whenever I talk to her about helping me find a car for her to drive, she only wants nice cars and won't really work with me on finding a reasonable car.

In my experience, some people will give bad reviews to Uber drivers that don't have nice cars. If the two of you are actually going to try for this, you may have to treat the car as a business investment. Just be sure that she won't back out after driving for a week or two.

So what do I do?

Depending on how the divorce split was done, selling the house now may cost you more than holding on for it for two years.

If you're going to try to keep the house, you most likely need to renegotiate with your ex step-father. Offer him a cheap buyout rate if he pays off a big chunk of the 2nd mortgage now and then roll what's left into refiing everything. Working with regional banks or credit unions may get you better results than going to big ones.

You might also explore whether you can pay most of the mortgage by renting it out and her moving to an apartment that she can afford.
posted by Candleman at 9:35 PM on April 25, 2016 [5 favorites]

Did your mother have her own lawyer in the divorce? A lawyer that represented only her, and wasn't paid by your stepfather? Is your mother getting spousal support from him, in addition to him paying off the second mortgage (which is really just the mortgage on his own home -- which must have equity)? If not, why not? Because what I see here is a woman who is probably in her 50's (??) who hasn't worked in at least ten years, who has been awarded an albatross of a house that she couldn't have reasonably been expected to pay the upkeep on. Honestly, she's not going to be able to pay a mortgage that is over $26K a year just by driving for Uber.

Selling the house is not the solution here, both because she may not be able to (due to the second mortgage - is the house underwater (or close to it) when you take both mortgages into account?) and also because, if she sells it, it sounds from what you're describing here that she would be parting with the only significant asset she was awarded in the divorce.

If she didn't have her own attorney, it might be worth your time to spend that car money on engaging a good divorce attorney, to see if there is any way to have the decree amended. What does the divorce decree say would happen if the house were sold? I sort of wonder if your stepfather anticipated that she wouldn't be able to keep up the mortgage payments, and thus would have to sell, and because she'll have to pay off the second mortgage to close the sale, she would end up paying off his Houston house. That certainly isn't equitable or acceptable.

Even if she did have her own attorney (and maybe decided to forgo spousal support to keep the "family home" -- its a bad decision, but people do it), it would probably be worth your time to have you both sit down with an attorney and discuss what the options might be for amending the decree. Also, a consultation with a financial planner probably couldn't hurt you -- if you are giving her the money to pay vs. paying directly you might be able to write the money off as a "gift" on your taxes, for example.

All the answers about "learned helplessness" above don't, I think, take into account the terrifying reality of your mother's situation, particularly if she didn't have a professional degree/career before the marriage. Alimony was absolutely made for situations like this, and it frankly should be her ex-husband who is paying her bills while she finds her way toward independence.
posted by anastasiav at 9:41 PM on April 25, 2016 [54 favorites]

I'm so grateful for anastasiav's answer because it's everything that jumped out at me when I first read your AskMe, but articulated in a way I could never have expressed. The divorce decree has created a defacto hostage situation. How demoralizing. Your poor mom.

I live in LA and Uber or Lyft is just a terrible idea for your mom under these circumstances, and I'm pretty sure the compensation is too low to help, anyway. But you know where your mom can make bank? Private Childcare.

The wage pre-school teachers make is simply awful, but the nanny's in my neighborhood made upwards of $20 per hour. Your mom could take CPR certification and some basic first aid course, get a copy of her driving record from the DMV and she'd be good to go. Nanny's who drive make more.

The income can be excellent and if you like children it's tremendously rewarding. It doesn't have to be a career, just something she does while she sorts out a new plan in life.

Hope that helps.
posted by jbenben at 12:44 AM on April 26, 2016 [10 favorites]

I agree with anistasiav--this sounds like a real nightmare situation.

Is there any way the house itself can be turned into an income-producing asset? Can you rent out a room or the garage or something?
posted by Sublimity at 4:41 AM on April 26, 2016 [2 favorites]

How about your Mom move out of the house and into a small apartment or a room. She can then rent out her house. The rent can cover the mortgage payments.

If she's having problems finding work, does your Mom qualify for any benefits? (Long shot).

Another option is to go back to court, and amend the agreement to where your Mom sells the house and your step-father pays HER the 2nd mortgage payment. You don't say what the house is worth, but one presumes that after the sale, there will be some equity for her to start over with.

I would talk to your Mom about your finances. She must be shattered but the way to deal with this isn't to beggar yourself. You can't afford to support her. Full Stop.

Can your mother take out student loans for job retraining? I'm no advocate of student loans as a rule, but if she can retrain that will jump start her career prospects. California's community college system is a GREAT resource of excellent vocational training programs and nothing is cheaper.

It's been three years. That's long enough. Time for your Mom to get her shit together. Someone who is pooh-poohing the type of car you're offering to finance...I have no words.

It absolutely sucks, but your Mom picked your step-dad, stayed with him and agreed to the divorce decree. She's made quite a mess of this, and it's time for her to make it right. This does not include sucking her child dry.

You've been more than generous, it's time for your Mom to stand on her own feet.
posted by Ruthless Bunny at 5:07 AM on April 26, 2016 [4 favorites]

I have a friend who drives for Uber, and as I recall, the car can't be more than a certain amount of years old if you're going to drive for them at all. (I want to say 3? 5?) It may not be that your mom is just picky, it might be that the plan won't work with an older car.

I agree she should be getting alimony, but also that she would make bank in childcare. An experienced older nanny willing to work for relatively low? In a lot of the places I've lived, that would get snatched up in a heartbeat.
posted by corb at 6:38 AM on April 26, 2016

Thank you everyone for your feedback. Trying to address all the points and questions made here in a single response instead of replying to each one individually...

There are a couple of other issues here:
(1) My grandma is living at the house now too
(2) My mom has a dalmation that she is extremely attached to so getting a small apartment is problematic (I almost wish she'd give up her dog)
(3) My mom is emotionally unstable and deals with depression and anxiety frequently
(4) When my step father turns 65 and if she doesnt remarry she could be eligible to get a portion of his pension payments (married for 10 years)

Thinking about the alimony question, is it too late to ask for this now? My step father is a huge asshole, so he's not likely to help us with anything that doesnt directly benefit him. Since they have a settlement I'm not sure how it would work to ask for it, but maybe the court could enforce it. Also laywers are expensive I've paid almost $7000 by now for unnecessary meetings because my stepfather is a jerk, and for adjustments. Maybe we just have a bad laywer -- I dunno why he said to just take the house instead of asking for alimony.

Then, what kind of options make sense in terms of the house... refinancing? trying to subordinate the loan? At this point the house value is around $400k with 250k left on the mortgage, so it's really dumb that we have to pay $2.2k on it.

I would rent the house out but the market where it's at isn't very active (outskirts of LA -- Antelope Valley), and the employment market there is horrendous.

The other problem with getting another small apartment if we manage to rent out the house is where to put my mom, my grandma, and the dog --- what city?

There's really no reason for them to even be in Socal, the only reason why theyre there is because my step father was working there and bought that damn house.

Anyway thanks for your thoughts everyone.
posted by nodebunny at 6:56 AM on April 26, 2016

My mom has a dalmation that she is extremely attached to so getting a small apartment is problematic (I almost wish she'd give up her dog)

Oh, please don't pressure her to give up the dog. If it was living with her while she was married, it was probably a great deal of comfort to her during the abuse. Your asshole stepfather may well have threatened it, too, so if you make noises about its going away (even with the best of intent), you may well trigger memories of abuse.

I feel that a lot of people taking the hard line on this don't appreciate what a number an abusive husband can do on his wife, especially someone of her generation who may have been raised with different gender-role expectations. This is not a teenage daughter sulking after a breakup. Nor is it your average thirty-five-year-old woman who just couldn't make it work with her husband. It may take years for your mom to regain independence. Now, if you can't afford to support her, you can't. Your income is your income. But please try hold on to your compassion.

I don't see any mention of therapy here. I think it is quite likely that your mother is suffering from depression, anxiety, both, or even PTSD, and that is making it very hard for her to plan for a scary new future. I can't imagine anything harder if you're suffering from anxiety, in fact. So my two suggestions are: (a) consult a different family lawyer, as your current one agreed to a crappy plan and doesn't seem interested in trying to fix it and (b) get her some mental-health help.
posted by praemunire at 8:35 AM on April 26, 2016 [3 favorites]

if they can move anywhere, they should move somewhere where jobs are plentiful and rent is cheap. Apartments take dogs. Are there family members in a place they'd like to live?

Presumably your grandmother contributes to the household via social security. So how does her income factor into this?

Given the update, I'd sell the house, take Step-dad to court for the second mortgage. At least your mom has cash in hand and can pay you back for what you've already paid.

Get a better lawyer.

Get your mom evaluated and treated for her issues, if it makes sense, start her on the road to disability.

When is she 62? She can collect social security then.

You have options, but you all sound like you're standing around wringing your hands.

Sell the house ASAP!
posted by Ruthless Bunny at 8:35 AM on April 26, 2016 [2 favorites]

I appreciate the mental health comments for sure, and she does have a pscyhologist she's seen but I dont know how consistant she's been with it. She's come a long way in terms of her anxiety since the divorce but now its mostly anxiety over money and getting a job. So we're working on that, but her mental health isn't the real issue I'm trying to solve by asking my question here, it's mine that I'm concerned about.

What I need is some financial advice and a reasonable strategy. I don't know what to do other than to wait for this two years to be up. I've been calling banks and tyring to find a bunch of solutions, uber, refi, relocate, etc, so wriginging my hands isn't a fair assessment.

Some comments about "Sell the house" to me is the short game, sometimes playing the long game is better. One complexity here is that even though the mortgage is high now, 2.2k, if we refi then its brings it down to 1k which is more manageable. If we sell the house and have to rent the rent is likely going to be more than the resulting mortgage, especially in the LA area. Plus, we need a family house -- as military we've lived in apartments all our life so ...

Finally, the issue with the house is that it's not a good location for jobs, for commuting, it's not even close to an airport. Nothing useful about it other than having a steady roof over heads.

Thanks again for the comments, and if you guys have thoughts on a strategy here I'd really appreciate that too.
posted by nodebunny at 9:08 AM on April 26, 2016 [1 favorite]

I'd be concerned about any plan that involved taking on responsibility for the second mortgage, such as a straight-up refinance. It does not sound like stepfather is reliable and a future of taking him to court for payments does not sound sustainable.

I meant to explain this before but I got worried about the dog: to "subordinate" a loan is to place it lower in repayment priority than another loan. So, for instance: the first mortgage on the house is considered the senior loan, the second is junior, subordinated to it. If the house were foreclosed on and the proceeds were not sufficient to pay off both loans, the funds would be used to satisfy the first mortgage first and the lender on the second loan could go whistle for its supper. It is not easy at all to convince a lender to subordinate their loan to someone else's loan--why would you agree to a plan that means you have less chance of getting paid back? I'm guessing it would be quite challenging to get the second-lien holder on the mortgage to agree to be subordinated to a new lender's credit. I've never heard of it, though that doesn't mean it's impossible.

You talk about the long game, but you can't play the long game if you can't stay in the short game. Am I understanding the numbers right, that even with the second mortgage included there's about $80K in equity in the house? Given that you all seem to be basically okay with living somewhere inconvenient, etc., would it really not be possible to buy a smaller house of similar inconvenience, etc., with an $80K down payment that would leave you with a manageable mortgage payment? Back of the envelope calculations indicate that you could put $80K on a $300K house and be paying about $1100/mo. Now, this does put you in that undesirable position of having to chase after the stepfather for ongoing payments--I would definitely consult with a lawyer specifically about how to ensure that his obligation survives the sale. But it would stop the bleeding and put finances on a much more sustainable footing going forward.

(A final note: you will not be able to put your mom on a self-sustaining basis going forward if she can't work due to depression/anxiety/PTSD. This is not just a matter of having sympathy for her, it's a matter of helping her address the health problems so she can regain financial independence. I.e., solving your problem.)
posted by praemunire at 10:19 AM on April 26, 2016 [4 favorites]

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