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  • Jul 16, 2015, 05:33 AM
    Parents got the house loan, but I own the house and make the payments
    I'm not an accountant, just a bookkeeper, and I'm having a problem trying to figure out how to enter these transactions.

    My husband and his former wife got a loan to purchase a house for their daughter. The daughter actually is the owner on paper, and she makes the loan payments. This is handled by her writing the check to my husband and his first wife, then, they cut a check for the loan payment, after depositing her check.

    How should I handle this?
  • Jul 16, 2015, 05:45 AM
    I guess I want to ask, this is just personal, why are you keeping it as a bookkeeping.

    Next, whose name is the deed in? Not decree from a divorce court (that may not be honored by a lender)

    Was the lender ever advised of a change in deed? And how was a change of deed done, without the loan being paid off?
  • Jul 16, 2015, 06:12 AM
    AK lawyer
    It looks like husband and his ex are "straw men" because the lender wouldn't approve a loan to daughter. If it was subsequently conveyed to the daughter, it appears that they have violated the "due on sale" clause, and the lender could technically foreclose the mortgage.

    But the question I would first ask is this: what sort of bookkeeping is OP asking about? Is this simply balancing a checkbook, or is OP trying to do their taxes?
  • Jul 16, 2015, 06:31 AM
    I think it looks like the husband and his ex wanted their daughter to have a house for which she couldn't get a mortgage. I agree that they are violating the lender agreement by putting her name on the deed. This opens up another can of worms: taxes. Hubby and ex get the interest deduction, but have to pay interest on the 'income' from the daughter. Daughter can take deduction for interest paid on 'loan' from parents. A mess if the IRS gets involved, never mind the lender.
  • Jul 16, 2015, 08:01 AM
    This really isn't a Law question and since this is a personal issue, it isn't really an accounting question. As the others have noted.

    So I'm not sure what you need to know. I can, however, give you an example from my own situation. Last year, my daughter needed repairs and tires for her car. I have an credit card account with a national car repair chain. O she took her car there and I had them bill my card. I made the payments, and my daughter sent me checks for reimbursement. I use Quicken to manage my checkbook, so I have a category named Reimbursements. The checks from my daughter were deposited under that category.

    The others have made some good points though. If the title to the property was transferred to the daughter after the mortgage was written but without the approval of the mortgage lender, if they find out they could enforce the due on sale clause. There may also have been something illegal done since the lender has a lien on the property. So I'm very curious how the house was put in her name.

    The parents can't claim a deduction for the mortgage interests since they don't own the property. And the daughter may not be able to claim it since there is no legal mortgage.

    So, mom and dad seems to have created a legal mess here.

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