If your parents have passed away and they had a mortgage, you may be responsible for the payments. Learn more about what to do in this difficult situation. If you are named as heir or beneficiary of a mortgage and the mortgage company is sending statements and notices addressed to the decedent (the person who has died), it may seem like someone else should be responsible for monthly mortgage payments. However, if you live in the mortgaged home, legally, you will also owe a mortgage.
Table of Content
• What happens if you inherit a house with a mortgage?
⮩ What if you didn’t know about the mortgage?
• Co-signed Mortgage
⮩What if your parents had no mortgage?
⮩What if you sell the property?
• Legal Mortgage Vs. Equitable Mortgage
⮩ Avoiding Mortgage Responsibility
• Factors affecting mortgage rates
What happens if you inherit a house with a mortgage?
If you’re named as the mortgagee (the mortgage holder) in your parents’ mortgage, you’ll be responsible for their mortgage. The lender continues sending statements and notices to your deceased parent or other family members who may have been liable for making payments. Generally, if the decedent had a jointly held account with his spouse, both names were on the mortgage and both names appear on the bank statement along with “and/or” language, then either person can make payments.
What if you didn’t know about the mortgage?
If your deceased parent has taken out a mortgage in their name only, they might have forgotten to tell you or they may not have known that they needed to include you as a co-borrower when applying for an entire loan modification. In this case, it is best if someone else in your family knows information about the mortgage in order to help protect your interests and avoid foreclosure of the inherited property after your parent’s death or even bankruptcy risk.
In some cases, a mortgage lender might require a mortgage co-signer. If you’re a mortgage co-signer and your parent passed away, then this means that the company can come after you for payment. If you and the mortgage company can’t come to an agreement, then the company may foreclose on the property.
What if your parents had no mortgage?
It is possible that your parent might have passed away without a mortgage or with only a mortgage in his own name only. In this case, after the death of your parent, you will be free of any mortgage obligations. Also, it would be unlikely for the mortgage company to try and collect payment from someone who did not sign their name on mortgage documents or co-sign on a mortgage loan contract
However, if there was no mortgage recorded on the property and you didn’t know about it before (or even after) your parent died, you’ll need to file a mortgage claim in order to get mortgage benefits such as mortgage insurance or mortgage death benefits.
What if you sell the property?
The mortgage is tied to your parents’ house and you want to sell it, but you don’t want someone else to assume responsibility for the existing mortgage.
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What if you don’t have enough money to make mortgage payments?
If you do not have enough money to make monthly payments, file for bankruptcy, or sell the house soon, there are legal actions that the company may take against you. A mortgage note is similar to a contract; therefore, it’s best if an attorney familiar with real estate issues helps you understand the consequences of defaulting on loan balance agreements.
Don’t let your deceased parents’ debts become yours! Speak with an attorney about what steps to take when outstanding mortgage debt becomes your responsibility after their death.
Don’t let any mortgage company foreclose on your deceased parents’ house! Speak with an attorney about how to defend yourself against foreclosure of property that is now owned by your parents’ estate or living trust.
Since mortgage laws vary by state, know that some states allow a company to foreclose on a home without taking action in court. This is called a legal mortgage and leaves the borrower’s heirs responsible for the mortgage even after foreclosure. An equitable mortgage allows an heir of the deceased borrower to escape liability if they were not aware of the mortgage or the deathbed transfer of title. An equitable mortgage requires lenders to foreclose through court approval and allows heirs to assume the payments.
Avoiding Mortgage Responsibility
If mortgage payments cannot be made, the mortgage companies may initiate foreclosure proceedings. If heirs are aware of the mortgage but the transfer of title has not occurred they need to act quickly to avoid mortgage responsibilities. Heirs can request a delay of foreclosure, which puts off the proceedings for about 60 days.
An heir’s attorney can file for an extension on foreclosure by filing a motion or notice with local court officials that is approved by a judge. This ‘saves’ the estate from mortgage responsibility and gives them time to address other issues. It does not guarantee mortgage default will be forgiven though. Pay close attention to any deadlines set by lenders if you attempt this option.
The federal law states that mortgage lenders need to file with the courts before foreclosing on a home. But some state laws allow mortgage lenders to foreclose without taking legal action.
If mortgage holders attempt an equitable mortgage, which makes heirs responsible for mortgage payments even after foreclosure, inheritors can escape this responsibility by paying off debt or filing bankruptcy. Federal law enforces lenders to file mortgage defaults with the courts as required by law. But if payments cannot be made, lenders may initiate foreclosure proceedings.
Factors affecting mortgage rates
Mortgage companies have a right to foreclose on the borrower’s home if mortgage payments cannot be made.
Heirs of the deceased borrower who were not aware of mortgage or the transfer of title may avoid mortgage responsibility if they act quickly.
The mortgage company can still pursue mortgage responsibility after foreclosure through civil action.
The probate court may grant the mortgage holder request for foreclosure on the mortgage
Federal law requires mortgage lenders to file mortgage default with the courts.
Mortgage companies may pursue mortgage responsibility after foreclosure through civil action if mortgage payments cannot be made. If you are responsible for the deceased person’s mortgage and payments are not being made, it is very important that you act quickly to avoid legal issues or additional fees.
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