Friday, November 25, 2011

When Someone Dies, Wonder What Happens To Their Home Loan?

I just closed a Short-Sale for a newly widowed seller. It was an obvious situation. The spouse passes away, the survivor can't pay the mortgage. Instead of having a foreclosure on record, we maneuvered a settlement via Short-Sale.

But, what happens if your elderly father dies? And, you're supposed to get the home? And, what if there is a loan against the property?

"Under federal law, the mortgage must be allowed to remain in effect without changes when it passes from one person to another because of a death. This negates any due-on-sale clause in the mortgage."

Now, that's good to know, right? Yes. But, if you can't pay, or there are other people involved? There could be many considerations about what to do. It's good to know that the mortgage stays the same. However, you may need to consider foreclosure, Short-Sale, paying off heirs, etc.

This link shares the whole article that prompted my little post this morning:

I would definitely like to remind my readers that if you have an elderly parent, it is wise to make sure there is some idea ahead of time about what would happen should that parent die with a loan outstanding. And, advise you to consider it could happen at any time....sooner than you'd expect.

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