When a loved one passes away, family members are not only left to grieve, but are also responsible for executing a will and ensuring the deceased’s finances and property are in order.
Often, a home is the most valuable asset a person has and if a person passes away and leaves a mortgage behind, the family will have some tough decisions. What happens if the mortgage can’t be paid and what should the family do?
If you are facing foreclosure after the death of a borrower, you have several options and need to know your rights and obligations. The attorneys at Moshes Law, P.C. are experienced with foreclosures can help guide you through the foreclosure and probate process.
When a homeowner dies and leaves a property with a mortgage, the heir who inherits the house needs to take over mortgage payments or the lender will begin the foreclosure process.
There are several ways an heir or family member can assume the decedent’s mortgage payments and they may have the option to seek a loan modification or refinance the mortgage.
If the inheritor decides not to keep the property, they have the option to sell it or even refuse to inherit the home and allow the foreclosure process to proceed.
Handling a foreclosure after death can be a complicated process and it is best to seek the advice of an experienced foreclosure attorney who can assist you in making the right decision.
The way property passes to beneficiaries depends on the decedent’s will and applicable state laws. Typically, real property passes to distributees automatically upon the death of the property owner.
When property remains subject to the debts of the decedent, like a home with a mortgage, the transfer does not eliminate the debt and the property will still be subject to any claims against the estate.
Yes. A lender can foreclose on a home after such things happen. When the home is already in the foreclosure process when the borrower dies, the lender can continue the process without informing the beneficiaries. This will result in the property being sold in a sheriff sale.
Some states require by law that if a homeowner dies during foreclosure, the mortgage lender must change the foreclosure litigation to include beneficiaries, executors, and administrators of the estate. This gives the heirs who are set to inherit the property a chance to stop the foreclosure of a house after the death of a homeowner.
If you inherit a property that is in the process of foreclosure proceedings, you have several options available to you.
It is important for beneficiaries to understand that they are not required to pay the mortgage of a property that is in foreclosure unless they are a co-signer on the loan or share the property title.
In some situations, the decedent’s estate will be able to cover the mortgage left on the property. Most of the time, however, the person inheriting the property will need to either assume the remaining mortgage or sell the property to pay the mortgage.
An inheritor can contact the mortgage lender to find out how much money is owed on the mortgage. If the value of the home is higher than the remaining mortgage, the home could be a valuable asset. If the remaining mortgage is more than the home value, the beneficiary may choose to refuse to inherit the property and avoid the financial burden.
The probate process is the legal process by which a decedent’s assets are distributed among beneficiaries. Assets can include real property like homes, personal property like vehicles, and even intangible property like stock certificates.
The laws surrounding the probate process vary in each state and if you are facing foreclosure of a house after the death of a homeowner, it is important to consult with a knowledgeable attorney.
The attorneys at Moshes Law, P.C. are experienced with foreclosures and how to handle situations of foreclosure after death. Don’t hesitate to reach out and schedule a free consultation today.
If you are the inheritor of a loved one’s home and are facing a foreclosure after the death of the mortgage holder, you may be asking yourself, “what do I do now?”. Don’t worry, you have options.
Transferring of the title from one owner to another takes place in the Probate Court and must be approved by the judge. A transfer of title from a property owner to a beneficiary typically happens under the direction of a will.
In some cases, the property may be held in trust. The trust instrument will dictate who gets the property upon the death of the trust creator.
Titles can also be transferred through a Transfer on Death Instrument. This notifies the Recorder of Deeds that a specific beneficiary should inherit the property. Transfer on Death Instruments is designed to quickly and efficiently transfer a property.
Before taking over a mortgage that is in foreclosure after the death of the mortgage holder, you should always find out how much is owed to ensure you are making a wise financial decision. The lender will most likely require proof of the person’s passing like a death certificate. You will also need to prove that you are the rightful heir to the property whether it is by a will or state laws.
Once the lender has given you all the loan details, you can work with them on either taking over the loan or finding out about other options.
If you aren’t sure whether a property is in foreclosure after the death of the borrower, you can check with your local County Recorder’s Office. When a mortgage lender begins foreclosure proceedings, legal documents are typically required to be filed with the county. These documents are public record.
Refinancing a loan is when you take out a new loan to repay the existing loan. The new loan will cover delinquent payments and new terms could possibly make monthly payments more affordable.
If you inherit a home that is in foreclosure, you can talk to the lender about refinancing the loan to extend the length of the repayment period to lower monthly payments. If you have better credit than the decedent you inherited the house from, there is a chance you can get a better interest rate on a loan and end up paying less money over time.
A loan modification is a way to refinance your mortgage to extend the term or lower the interest rate, similar to refinancing. Some mortgage lenders may work with you and settle for monthly payments that fit your budget. Loan modifications are typically temporary and used to get into a more stable financial situation. After a period of time, the lender will expect the normal loan terms to resume.
If you inherit a home that is in foreclosure and decide you don’t want to keep the property, you can instead opt for a short sale. Short sales are usually done so homeowners in foreclosure can save their credit score. Even though inheritors don’t face this credit risk, a short sale is a good way to quickly sell a property.
Short sales require the approval of the lender, and the lender usually only approves the request if the purchase price equals or exceeds what they would expect to gain from a foreclosure sale.
A deed in lieu of foreclosure is essentially a negotiation with the mortgage lender. The homeowner agrees to turn over the deed of the property to the lender to avoid foreclosure. To qualify for a deed in lieu of foreclosure, you must be unable to sell your home before foreclosure.
Like a short sale, a deed in lieu of foreclosure is usually done to save a credit score but people who inherit a house in foreclosure are not at risk of negative credit marks. If an inheritor does not want the property, they can refuse the inheritance and allow the foreclosure to go through without any effect on their credit score.
If you have inherited a house that is in foreclosure after the death of the borrower and do not know what to do, do not wait to seek legal advice.
The lawyers at Moshes Law, P.C. understand that losing a loved one and going through the probate process is difficult enough on its own. You shouldn’t have to face a foreclosure as well without guidance and learning your rights. Call Moshes Law Office today for a free consultation.