In the event of a death who assumes mortgage?


B

Bobby

I have looked all over google but I am not able to find an answer and
this is the closest group I am able to find that may have some info.
My brother passed away Monday and the mortgage was in his name only.
My question after we inform the mortgage company of his passing, what
happens will the bank just transfer it to her name or does she have to
qualify for the mortgage on her own? What happens if she does not
qualify? If this is really not the right group for this question I
would appreciate it if someone can point me in the right direction.

Thanks
 
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J

John A. Weeks III

Bobby said:
I have looked all over google but I am not able to find an answer and
this is the closest group I am able to find that may have some info.
My brother passed away Monday and the mortgage was in his name only.
My question after we inform the mortgage company of his passing, what
happens will the bank just transfer it to her name or does she have to
qualify for the mortgage on her own? What happens if she does not
qualify? If this is really not the right group for this question I
would appreciate it if someone can point me in the right direction.
Since your brother has died, you need to settle his estate. After
discovering and inventoring all of his debts and assets, the
executor of his estate will dispose of the house and mortgage
according to the wishes that your brother left in his will.
There are several possibilities. If there is enough money in
the estate, the estate can simply pay off the mortgage. If there
isn't enough money, then the house needs to be sold to satisfy
the mortgage. If his wife wants to stay in the home, she can buy
the house, possibly using funds from life insurance and money
that she inherits from her deceased husband.

The big thing here is to follow the legal procedure. If you
try to do something under the table or pull a fast one on the
court, some one might end up with a title that they are unable
to transfer later on.

-john-
 
B

Brent D. Gardner, ChFC

Bobby said:
I have looked all over google but I am not able to find an answer and
this is the closest group I am able to find that may have some info.
My brother passed away Monday and the mortgage was in his name only.
My question after we inform the mortgage company of his passing, what
happens will the bank just transfer it to her name or does she have to
qualify for the mortgage on her own? What happens if she does not
qualify? If this is really not the right group for this question I
would appreciate it if someone can point me in the right direction.
Did he have enough life insurance to pay off the mortgage?

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.
 
P

Paul Michael Brown

I have looked all over google but I am not able to find an answer and
this is the closest group I am able to find that may have some info.
My brother passed away Monday and the mortgage was in his name only.
My question after we inform the mortgage company of his passing, what
happens will the bank just transfer it to her name or does she have to
qualify for the mortgage on her own? What happens if she does not
qualify? If this is really not the right group for this question I
would appreciate it if someone can point me in the right direction.
I assume that when the original poster referred to "her," he means the
decedent's widow.

It's impossible to answer the question exactly without more information.
We know the decedent qualified for the mortage solely on his own credit,
so it's possible the house was titled in his name only. If that's the
case, the house will have to "go through probate" as an asset in the
decedent's "estate." During probate, the executor of the decedent's estate
(sometimes called a "personal representative") will first pay off any
debts the decedent owed at the time of his death. Then he will distribute
the decedent's property. If the decedent had a will, that controls. If the
decedent did not, then the law of "intestate succession" in his state
controls. Usually, the widow takes everything if her husband dies
intestate.

Most mortgages have a "due on transfer" clause. When the property is
transferred to anybody else but the original borrower, the outstanding
mortgage balance is due. Assuming the decedent died intestate and his wife
inherits the house it seems to me the lender would demand payment of the
outstanding mortgage balance. If the widow has enough money to pay the
outstanding mortgage balance, she could do that and own the house free and
clear. (Perhaps the decedent took out enough life insurance with the widow
as the beneficiary to pay off the mortage. Or maybe the widow inherited
liquid assets like stocks or bonds from the decedent that she could sell
to pay off the mortgage.)

If the widow cannot pay the outstanding mortgage balance, then she has two
choices. She could refinance the house by applying for a mortage using her
own credit. We don't have enough information to determine if this is
possible. Is the widow a 40-year partner at a big law firm making serious
money? Or the proverbial little old lady who never worked outside the home
and who has no credit in her own name? If she's the former, she can easily
qualify for a mortage. If she's the latter, then she's going to have
trouble borrowing money. So we need to know more about the widow. The
other option is to sell the house and move elsewhere. Again, we need more
information. How much is the house worth? How much is left on the mortage?
Is a reverse mortgage an option? Does the widow want to move to a smaller
place?

Finally, the original poster should submit his query to misc.legal.moderated.
 
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S

S. L. Richardson

(SNIP)
Most mortgages have a "due on transfer" clause. When the property is
transferred to anybody else but the original borrower, the outstanding
mortgage balance is due. Assuming the decedent died intestate and his wife
inherits the house it seems to me the lender would demand payment of the
outstanding mortgage balance. If the widow has enough money to pay the
outstanding mortgage balance, she could do that and own the house free and
clear. (Perhaps the decedent took out enough life insurance with the widow
as the beneficiary to pay off the mortage. Or maybe the widow inherited
liquid assets like stocks or bonds from the decedent that she could sell
to pay off the mortgage.)

If the widow cannot pay the outstanding mortgage balance, then she has two
choices. She could refinance the house by applying for a mortage using her
own credit. We don't have enough information to determine if this is
possible. Is the widow a 40-year partner at a big law firm making serious
money? Or the proverbial little old lady who never worked outside the home
and who has no credit in her own name? If she's the former, she can easily
qualify for a mortage. If she's the latter, then she's going to have
trouble borrowing money. So we need to know more about the widow. The
other option is to sell the house and move elsewhere. Again, we need more
information. How much is the house worth? How much is left on the mortage?
Is a reverse mortgage an option? Does the widow want to move to a smaller
place?

Finally, the original poster should submit his query to
misc.legal.moderated.


I may be wrong, but doesn't Garn-St. Germain (Depository Institutions
Deregulation and Monetary Control Act of 1980) prohibit the mortgage company
from
effecting the due on transfer/sale clause to a surviving spouse in this
situation? Something to ask your probate/real estate lawyer. I think it
may apply here. It may also only apply in community property states - worth
looking into.

Jason Richardson
Attorney, CPA
Sherman, Texas
 

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