DEAR BRUCE: Some family friends bought a house several years ago, when the housing market balloon was about to pop. Needless to say, they way overpaid for the house. They were able to pay for a couple of years, then, unfortunately, one of them lost their job. Now they are in dire straits and may lose their house.
Because we have a great pension and a lot saved, we are thinking of helping them out. I would hate to see them lose their house. Would it be wise to help the family make their house payments in hopes that they can find work? If they are unable to find jobs equivalent to what they were paid, might the house be refinanced at a later date at a lower rate of interest? -- Trying to Help, via email
DEAR TRYING TO HELP: While I commend you for considering such a generous offer, if my suppositions are correct, it probably would not be a smart move. If the family purchased the house a few years ago at the height of the market and now that market has softened, essentially they have no equity in the home, and little prospect of having equity for a long time. If you choose to help them, you would have to go in with the idea of never seeing the money again. If you are OK with that, I applaud you.
I would not continue to pay the mortgage on a house that is undervalued and has little chance of recovery for a considerable time. A voluntary repossession would likely be in your friends' best interest. Helping them get into a rental property would be very generous.
DEAR BRUCE: I need to make a change in my will.