Should my mother walk away from her mortgage?

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My mother was recently removed from her home that she was sharing with my brother, because the house was covered in filth from my brother's 24 dogs (dog hoarding) Long story short, she is currently living with me. She needs extensive dental work and would be best off in an Assisted Living situation. The house was purchased for $170,000 12 years ago. The current mortgage left is $100,000k. The market shows a possible value of $175,000 but the house needs at least $20K worth of work. Do we take her savings (not a large amount of savings) and fix the house and hope it sells (in a year or more)? Or, do we walk away and use her money to fix her teeth and find a nice place to live NOW?

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Thanks for all of your answers. Maybe I was too general with my question.
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You can contact the mortgage company about "deed in lieu of forclosure".
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Ok sounds like you are on the fence on this....
- get it appraised. Spend the $ 400 -500 of moms $. You will need this if there is any blowback from Medicaid or carping from family. Get this done ASAP. Your community bank if they have a mortgage division has a short list of appraisers. Residential appraisers stay busy so you may have to hunt for one.
- if you think there is structural issues or foundation problems, I'd suggest you get the house inspected first (before appraiser). Again bank has names or ask a good well established Realtor for names. inspection report is given to appraiser.
- contact mortgage co and get amount to do pay -off, I'd do this after the other two have happened and your just waiting for the appraisers report.
- repairs & construction. Get estimates while you are waiting on appraiser report.

Then run the #s, you probably already know the answer!

Folks especially elderly end up walking on a mortgage. Elderly (in 80's, 90's) with a mortgage probably has all other bad decisions done......as rheres likley some dementia as well. Theres lots of posts on this site with kids finding thier parents in this sad situation. There is some tax fall out cause mom could get a 1099-C on the mortgage. But a good CPA can deal with this if mom is in a facility & on medicaid as she's going to be impoverished by the time that tax document happens.

It's got to be tough but keep in mind a visual of mom living in dog feces and you never ever want her to be there again.
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Also you mentioned fixing it and "hope it sells in a year or more"..... So how are all the costs on the home during this phase going to be paid?. Insurance is going to be a problem as its going to be a vacant dwelling policy with construction rider and it sounds like it literally looks like crap so no underwriter will likely do a policy. Reputable construction co wants property owner to have some sort of insurance. Mortgage co will require insurance too as they don't want a workmans lein placed if something goes wrong. Plus utilities, city / county fees, taxes,.....
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Thanks for the replies. I guess my question is how ethical is it to walk away? I know about home values, etc. The house has already been cleaned from the animal hoarding situation. Now we are looking at painting the whole interior, exterior, new carpet, new appliances, landscaping - basically a bunch of money to hopefully sell the house in a soft market. And no flipper would be interested in the amount of money needed to update a house in a neighborhood that isn't being sought after. Igloo572 - you are thinking the same way I am. Thanks!
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$ 175K is for comparable sales of homes based on sq footage, # of BR & BA. It is wishful thinking imo. This info is basic on all property and what your tax assesor uses; it's divided into land and improvements (the house) Your moms house probably with years of damage from hoarding will not ever come close to being able to be sold for 175k. If it has / had health code violations and structural issues, it could never sell on traditional MLS Realtor market as its not going to be able to qualify for FHA or VA lending.

I'd suggest you get it appraised by a licensed registered appraiser (not the comps done by a Realtor). The appraisal is legal document and will have a seal. Cost usually based on sq footage. Maybe $ 400 - 500. It could be it comes in at only the land value. Land maybe 20% -35% of value.

If it sold for land value or appraisal value would that $ totally cancel out her mortgage and give mom $? If not, Maybe not worth spending any $ on. Or even paying on the mortgage anymore. If all mom has is less than 20k, getting needed dental & fully paid funeral /burial would be my priority for how my mom spent her final $ before needing to file for medicaid over a property with all sorts of issues. Dental & death very expensive.

Who knows what problems lurk beyond the sheet rock or foundation......

Flippers in my experience need to buy a house for as close to land value and do whatever repairs to get it sold at comps within 4 - 6 weeks. Houses with structural issues; sanitation violations or things that legally require remediation (chinese dry wall, mold, flooding, open sewer) are going to take the house into months before a sale can happen and won't be attractive to any investor unless it's for pennies.

Really get it appraised and see that $ to guide decision.
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I would look into selling it as-is to a flipper. There are signs all over our town "we buy houses". Maybe you can get a no obligation quote from a few. Find out the true appraisal from the county and try to stay in that ballpark for future options with Medicaid. Take lots of photos showing the extent of the damage. You might even need to challenge the county's appraisal.
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