Can someone with a $240,000.00 mortgage sell their house to another person for $1.00 or why would they do that?

If its a deed transfer i.e transferring without actually 'selling', in some states there needs to be at least a $1.00 consideration. Check with your state and get some professional advice on tax ramifications for both parties.

Sounds like a scam. Here is the issue. You own the house with a $240k mortgage. Someone buys the home from you for $1. Now they own the home, but the lien against it for $240k (to secure the mortgage) also transfers with the property, but the loan remains in your name. Now suppose they put the house up for rent, collect $2,000 per month for a year (or more) and don't make any payments to the bank. They've earned $24,000+ and when the bank sends you the Notice of foreclosure, you can't take the property back, because you no longer own it. Instead the bank forecloses against you, takes the house, BUT you take the hit against your credit, and depending on your state's rules, get sued by the bank for their loss. Sounds like a scam. My advice is Never, EVER allow your name to come off of title unless the attached lien gets paid off. A competent Real estate Attorney will tell you the same thing. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

My first inclination is to say sure, why not. But maybe you should consult with a MA attorney and tax professional to see if there is anything else to consider. If it's an inter-family transfer perhaps you could sell it to them for $240,000 with a $239,999 gift of equity. Just thinking out loud.

Not sure why they would do that unless their was a personal intrest of some sort but the mortgage would still have to paid off.

That's a good question. You can sell your home for $1 or $1,000,000. There are some caveats though that you and the buyer may need to consider. If you are attempting a short sale, the documents will say that you can never live there again and that the buyer is not related. The mortgage company will need to approve the sale and will perform a value analysis before they agree to write down the mortgage. If you are selling that far below market, the IRS may get involved as the buyer is receiving a taxable gain and you may be scrutinized if you attempt to take a taxable loss.

Are you paying off the $240,000 loan?

The $240,000 mortgage will need to be paid off. After that you should be able to sell for whatever you want to. If you are thinking you will sell to another person for $1.00 and walk away from the mortgage - no - you cannot do that. It would be considered a short sale and the lender must approve a short sale.

You really need to check the state laws regarding this.