Has anyone been able to refinance their mortgage with a life estate deed in place?
My parents sold their home to me in 2005, at less than FMV and retained a life estate interest for themselves. All three of us were on the original note and mortgage. In 2007, we refinanced with a new lender, Freedom Mortgage Co. My husband and I signed the note (co-borrowers), and all four of us signed the mortgage. Our deed was never changed, so I am currently listed as the sole remainderman and my parents are life estate holders.
Last month, my husband and I applied for a cash out refi with Freedom, and were conditionally approved for a loan amount of 395k at 4.75%. Freedom’s third party title co, drafted a deed adding my husband to the title and keeping my mom’s life estate in place. My father is now deceased, so we sent in his death cert. We also confirmed with them that my mom is living in the home and is willing and able to sign whatever documents they required.
Weeks later, Freedom’s in house title dept. nixed the transaction. According to a new policy, they won’t proceed with the life estate deed. They need us to get an outside atty. to draft a new deed removing the life estate, and then once the new deed is filed, they will proceed with the refi. We would also have to pay a fee to extend our rate lock period which expires 12/8.
I would appreciate any recommendations for a lender or broker that would work with us. Our preference is to keep the life estate, but if that’s not possible, we’d be willing to sign a new deed without it, and close the refi at the same time.
Thank you!
