Legal Question in Real Estate Law in California

The quickest and simplest solution is for you to loan him the money to get current. If he sells you the house and files bankruptcy the bankruptcy court will likely invalidate the sale and bring it back into the bankruptcy estate. However if he files bankruptcy it will automatically stop the sale temporarily which will give him more time to deal with all these issues.

Generally speaking the Banks are doing an awful job at granting modifications. If your son is not employed he won't get a modification, but perhaps he could get a forbearance agreement instead. He also needs someone to deal with his credit card issues and the threat of filing BK is almost as good as doing it.

So what he really needs to do is go see a competent bankruptcy attorney who deals with loan modifications and not one of those cut rate mills now.

If you need the name of someone please give me a call at (866) 981-1850.

Good luck and hope this helps.

You sure don't want to jeopardize that $170K of equity unnecessarily. Where does that market value figure come from? I wouldn't trust Zillow, or anyone who lacks appraisal credentials or hasn't seen the interior. The starting point for making a strategy is good data. I'd hire an appraiser......and explain the purpose of the appraisal.

Next advice is not to engage in any son-to-father sale without considering three factors: (1) whether it will impact his or your taxes - property, gift, capital gains, etc.; (2) whether the transfer is fraudulent, which it well may be if it changes hands below fair market value and has the purpose, or the effect, of hindering, delaying or defrauding a present or potential creditor; and (3) whether the transfer will make things worse with the lender by triggering a due-on-sale provision in the loan.

I'm apprehensive about bankruptcy because it takes matters out of his (and your) hands and may end up in a rearrangement of his affairs in a way that is suboptimal in net result. However, a really good BK lawyer can explain the advantages and disadvantages to the family and give you a much better-reasoned recommendation than I.

I tend to agree with Mr. Belli's thought that you lend him the money to cure the default to or bring the loan current (depending upon where the foreclosure proceedings now stand). That would give him the time to list and sell the property, pay his debts (including his first and second, seller's commission, credit cards and maybe you. He might even have enough cash to rent and otherwise get by until he gets another job. In exchange for the additional loan, I'd think you should ask for a third deed of trust and maybe an option to buy the house or a power of attorney to list and sell it.