Summary
Brother and I inherit house, he borrows against the house with my permission, property value goes down so much as to be about how much he borrowed against the house, I ask my brother to temporarily reduce rent since he is borrowing against my half and he has no intention of paying it down, he refuses and treats me like shit.
It?s a long story so bare with me.
In 1997 my brother and I?s father died. Since my parents were divorced, when my dad?s mom died in 2006, my brother and I inherited her house. We decided it would be best to keep our grandmother?s house rather than sell it because of the low property taxes we would inherit due to California Prop 13.
In 2006 I was preparing to transfer from a junior college to UCSB. My brother and I decided to rent out the house, so I would have about an extra $500 a month to help pay for school.
Here is where the problem comes into play. My brother asked me if he could take a loan out on our house for $183,000, his half of what the house was worth. I told him that was fine, because I was more concerned with finding a place to live in Santa Barbara. I was also under the impression that if I wanted to borrow money against the house I could.
After I graduated, I told my brother I wanted to move into our house. We were charging our last tenet $1,300 a month, so I agreed to pay him $650 a month. We would continue to split the water, utilities, property taxes and home owners insurance. We had no formal/written down agreement.
I had gotten engaged and promised my future wife that we could pay for the wedding by borrowing money from the house. Like my brother had a couple of years ago. Everything was going fine; until my brother tells me he has not been paying our bills and has fallen behind. He asked me to pay some of the bills and I did.
So I asked my brother how much he owed on the house. He had only been making interest payments on the money he borrowed against our house. My brother and I?s house was worth about $200,000 now and he still owed $183,000 on the loan.
So I cannot borrow against the house like he did because there is no equity left. I also found out that regardless of the how much the house was worth, I could not borrow money against the house like he did and get a comparable interest rate. (Second mortgages have worse terms than firsts)
My brother has no interest in paying more each month on the loan to reduce the balance. I cannot sell the house because after the bank got its cut, there would only be about $10,000 left. My brother has basically told me that I have to wait out the market because that is what is best for him.
I feel like my brother has borrowed against my half of the house, leaving me unable to use the house in the same way he has. I feel like this is not a 50/50 partnership, but an older brother telling a younger brother how things will be and that I better like it or I will lose my house and there will be no skin off his nose because he already got his $183,000.
Now to the question.
I asked my brother if he could temporarily reduce rent. This would allow me to save up some money to pay for my wedding. He told me absolutely not, he relies on the rent each month to make his interest only payment on the house. That kind of pissed me off because my brother owns a boat, has been to Mexico twice this year, has been on a cruise this year, goes on weeklong tours with bands and basically has a much higher standard of living than I do, which does make me jealous. I can?t even afford to take my wife on a honey moon. (We got married at the county courthouse because we are poor and both freshly out of college).
I don?t feel like I should be paying rent to my brother who has borrowed money against my half of the house. I feel like a fool each month paying him rent.
Would you pay him rent? What are the possible consequences of not paying him rent? If he stops paying the mortgage, and the house is foreclosed on, what options do I have to protect my half?
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