A way to get out of foreclosure...possibly?

[Digit]

I am not in this situation by far, nor do I know anyone personally who is.
Would it be possible if you own your home to sell it to your children, but retain a life estate which allows you to stay in the property until you die?
You might want to check with an attorney, but I would hate to see someone having to live under a bridge or in a cardboard box due to unfortunate circumstances.

[Warpy]

1. It can't be a paper sale to avoid debt

which means your children would have to pay fair market value.

And yes, some folks will end up in cardboard boxes until this horror of a bankruptcy bill winds its way through the courts and is eventually thrown out.

[Digit]

2. Are you SURE it has to be for fair market value?

Just curious.

[Warpy]

3. Otherwise it's fraud.

Check the laws in your area.

[flvegan]

4. No, a Life Estate isn't a way out of foreclosure.

All a Life Estate guarantees you is that until you die, you have a home to live in SO LONG as you pay your mortgage note.

A Life Estate creates an interest via possession, though vested title passes to the the grantees on the vesting deed.

Now, even if you had no mortgage, and owned the property outright, yet "sold" it to your children while retaining a Life Estate, and THEY took out a mortgage, the fee simple titleholders (the children) as well as the Life Estate holder would have to sign any security note/mortgage. If the interest holding a Life Estate didn't execute a mortgage, then that individual, while still living would have a claim on the property or the title insurance policy.

Seek a lawyer, don't take my word on it.

[Digit]

5. I am just thinking of what may happen to people in the future.

Luckily, I am not in this situation.
Myself, I live in a four bedroom home alone, and I was thinking of taking in people in the future once my daughter is married and on her own.
The thought of elderly having to live on the street is more than I can bear.
I was trying to think of ways for them to retain their homes in these troubled times.