‘I’m 60 and looking to retire’: My brother was released from jail and wants to buy back our parents’ foreclosed home. Should I help him?
Dear Quentin,
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I’m 59, and have a $280,000 underwater mortgage on a house I bought for $100,000. Should I sell?
My youngest sister took out a $250,000 mortgage on our mother’s two-bedroom family home in 2007 after convincing my mom, who passed away in 2008, to put her on the deed. She never paid a dime. She eventually lost the house on a foreclosure appeal by the bank.
Now my sister has been given notice to vacate, and my brother wants to get the house back at auction. I feel it’s a lost cause. Interest rates will have doubled the debt. Also, my brother is just getting his life back together after being incarcerated. I don’t see how this can happen.
I don’t want to make promises I can’t financially live up to. I own my own house and struggle to keep that in order. I’m 60 and am looking to retire in two years. My brother is 50. I don’t want nostalgia to be a financial burden that we can’t maintain. Should we try to get the property back or move on?
The Other Sister
Dear Sister,
Your brother needs support, but this is not the way to go about it.
Unfortunately, your sister took ownership of your mother’s home while your mom was still alive and somehow persuaded your mom to put her on the deed of the home. This was unwise for several reasons, not least that your sister could have evicted your mother during her lifetime, and deprived the other siblings of their inheritance. Incidentally, she also robbed herself of the ability to take advantage of a step-up in basis if she had sold the house.
Even if you could afford this home without risking your retirement, you would need to think carefully, as it would not be an investment. Your brother would likely end up living there for the rest of his life, and you would not be in a position to, nor would you wish to, sell it out from under him. I’ve said it before and I’ll say it again: Don’t make big financial decisions based on emotion.
Interest rates were roughly 5% in 2007, compared with 7% currently. Interestingly, 5% is the rate many economists believe will attract more buyers to get off the fence and start looking in earnest — yet 30-year fixed-rate mortgages averaged 7.7% between 1971 and March 2024, according to Freddie Mac, the government-backed mortgage-financing firm.
As you imply, 5% looks optimistic in the near term. Realtor.com, the real-estate listings website operated by Move Inc. (a subsidiary of News Corp. NWSA, which also owns MarketWatch publisher Dow Jones) estimates that mortgage rates will stay at an average of 6.8% during 2024, although it notes that there is a possibility the 30-year rate will decline to somewhere around 6.5% by the end of the year.
Emotional toll of incarceration
I sympathize with you and your brother. Incarceration takes an enormous toll on an individual, and he naturally craves familiarity and security. One way he feels like he can achieve that is by living in the comfortable surroundings of a family home that is soaked in childhood memories and perhaps evokes a simpler time. That makes sense in theory, but it won’t fix what’s going on inside.
A multistate study on the psychological and emotional cost of re-entry into society by the Institute for Justice Research and Development at Florida State University takes a deep dive into life after release from prison. It cites former inmates who experienced the loss of a home to foreclosure, as well as missed birthdays, job loss and, of course, the adjustment to a new life with a new social network.
“For many, leaving incarceration initiates a phase of psychological turmoil. Men and women returning home must quickly adapt to the changes they see all around them — in the world, in their families, and in their communities — and they yearn to rapidly move toward independence and self-sufficiency,” the researchers, Carrie Pettus-Davis and Stephanie Kennedy, wrote.
Many former inmates have difficulty adapting to life outside. “Leaving incarceration is an incredibly common experience, as more than 10,000 individuals leave prisons each week across the United States,” Pettus-Davis and Kennedy said. “They return to families who also experience the burden of incarceration and the re-entry of their loved ones.”
How to help your brother
The most important word in your letter is “we.” I support your brother getting back on his feet and having the security of once again owning his own home, but that is something he will need to do himself. This is not a good time to upend your own finances by trying to come up with a down payment or the cash to buy a home that your brother may not be able to afford.
Your brother needs to focus on getting a job and building up his credit score, assuming he can’t buy a house on his own right now and doesn’t have the ability yet to get a mortgage. Seventy-eight million people in the U.S. have a criminal record, per this estimate. That can affect their ability to get a job and even rent an apartment. He will require the support of his community — his family and friends — to help him along the way.
He needs to take his new life one step at a time. As this MarketWatch story noted, people with a criminal record often ended up working in sectors like waste management, administrative support, remediation services, accommodation and food services, but their average hourly earnings are typically lower than the national average.
Your brother is not the first person who would like to buy their old family home, or even their grandparents’ home — one where they have memories of feeling safe and happy and valued. But he needs to focus on other priorities first. There is help out there: The job-listing site Indeed has committed to helping 30 million formerly incarcerated job seekers who face barriers to employment get hired by 2030.
Financial stability comes first. After that, he can focus on buying a home.
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