CASE STUDY NO. 7
Situation: A retired gentleman( in his late 80s) was experiencing financial problems. His wife recently passed. He was on a fixed income and only had limited savings. He had owned his home for several decades, and it had quite a bit of equity in it. However, $ 100,000 was still due on the first position mortgage loan. Adding to his money troubles were rising utility costs, annual property tax increases, the nationwide inflation rate for food and fuel was going up pretty fast as well. There were also other homerelated cost increases as well for things such as homeowner’ s insurance, maintenance, etc.
Problems: The gentleman recently received a NOD( Notice of Default / Preforeclosure) in the mail from the mortgage company due to nonpayment. Further, he had used up almost all his savings trying to keep up with all his monthly expenses.
Solution( s): The homeowner needed immediate shortterm funds, to keep from losing his home at a looming foreclosure auction. A financially savvy friend of the homeowner brought in a STEF who fronted the shortterm funds needed to reinstate(“ cure”) the first position mortgage by paying off all outstanding payments owed to the lender, including any accumulated interest, late fees, and foreclosure costs.
However, STEF funding is only short term. What was needed was a longterm solution that would allow the gentleman to stay in his home of 45 years, until his passing. The same financially savvy friend of the homeowner reached out to a private investor with whom they arranged a home equitysharing arrangement. The private investor agreed to: pay off the STEF investor, and then make all homerelated monthly payments on a goforward basis( mortgage, taxes, insurance, maintenance, etc.) The homeowner agreed to pay for the cost of monthly utilities.
The homeowner and the private investor signed a contract which stipulated that, after the gentleman passed away, the investor would sell the house to the highest bidder. The contract( arranged by a real estate attorney), stated that the investor was to get back all the money he had fronted + 50 % of the net profit that remained after all costs had been accounted for( Realtor ® sales commission, closing costs, etc.). The gentleman’ s heirs received the remaining( 50 % net) profit from the sale of the property.( FYI: For a list of private and public home equitysharing firms, see: https:// money. com / besthomeequitysharingcompanies).
CASE STUDY NO. 8
Situation: An elderly widow found herself in a financial quagmire. Her husband had handled all things financial in the household during their long marriage. Now that he had passed, she was left with major financial fallout as a result. The good news is that she owned her home free and clear.
Problem: The bad news took several different forms: First, once he passed, HIS social security payments stopped flowing into their joint checking account. Second, she was shocked to learn that( due to some oversight on the part of her deceased husband), HIS pension check stopped arriving each month once he passed. In other words, the pension did not include any survivor benefits. Third, being totally unsophisticated when it came to financial matters, and in order to keep food on the table, etc., she started using credit cards to fill the gap between her monthly expenses and the meager amount of income she was receiving from her social security and a small pension. Fourth, after a short while, she completely exhausted her remaining savings in an attempt to pay off the mounting credit card debt, not to mention covering normal monthly household costs for utilities, property taxes, maintenance and upkeep of the house, fuel and insurance for her paidfor car. Fifth, she was now the lone occupant of a house that was way too big for her to keep clean and maintain by herself What she needed was a way to both downsize AND substantially boost her monthly income.
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