Is a Lender Allowed to Foreclose After a Borrower’s Death?

• 21 Jul 2023
• Foreclosure Lawyer

While it’s common for people to think that their heirs will have to take out a new loan or refinance the house after their death, this isn’t always the case. The lender may need the assumption, refinance, or loan modification in the event of the death of a property holder with a mortgage.

Most individuals are unaware that the lender cannot foreclose as long as the heirs make mortgage payments. The deceased person’s heirs can maintain the mortgage in their name. Due to this restriction on personal recovery of debt from the heirs, lenders may only pursue what is secured by an original mortgage or other interests in the property. The lender will be unable to collect any debt from the heirs.

What Happens to a Mortgage After the Death of a Homeowner?

Foreclosure begins when the homeowner dies with a mortgage on the property. Heirs and family members can accept the decedent’s mortgage payments, and they may have the opportunity to apply for loan modifications or restructure their mortgage, depending on their circumstances.

If the inheritor doesn’t want to keep the property, they can either sell it or refuse to accept the inheritance, in which case the foreclosure will go on. An experienced Queens foreclosure lawyer can guide you through the process of dealing with foreclosure after a loved one has passed away.

Who Takes on The Mortgage?

The deceased person’s will and the laws of the state in which the estate is located determine how the property is distributed to the beneficiaries. Real estate is typically transferred to heirs upon the death of the owner.

When property, like a home with a mortgage, is still subject to the debts of the person who died, the transfer does not get rid of the debt, and the property is still open to any claims against the estate.

What Happens If You Inherit Something In the Process of Foreclosure Proceedings?

There are various choices accessible to you if you inherit a property currently in foreclosure.

Your Obligation

Beneficiaries should be aware that they are not obligated to pay the mortgage on a property in the process of foreclosure unless they are a co-signer on loan or share the property title. Beneficiaries must realize this fact.

There are various cases where a deceased person’s estate can pay off their mortgage. However, in most cases, the person who inherits the property will be required to either take over the remainder of the debt or sell the home to pay off the mortgage.

An inheritor can contact the mortgage lender to inquire about the amount of money that is still outstanding on the mortgage. As long as the home’s worth exceeds its remaining debt, it could be a desirable asset. Even if a home’s value is more than its mortgage, a beneficiary may choose not to inherit it to avoid financial responsibility.

The Probate Process

Probate is the legal procedure used to disperse the assets of a deceased person to their heirs and other designated beneficiaries. Assets might comprise tangible and intangible property, such as real estate, vehicles, and stock certificates.

Each state has its probate laws, so if you are facing foreclosure on a home because of the death of a homeowner, you should speak with an experienced foreclosure defense attorney.

Radow Law Group, P.C. foreclosure defense lawyers have extensive knowledge of foreclosures and how to deal with them when a borrower has passed away. Please don’t hesitate to get in touch and arrange for a no-obligation consultation.

What Can You Do After the Death of a Borrower?

You may ask yourself, “what do I do now?” if you have inherited someone’s house and are now facing foreclosure because the mortgage holder passed away. Don’t be alarmed; there are many solutions available.

Transfer The Title

A judge must grant permission for a title to be transferred from one owner to another in the Probate Court. In most cases, a will directs the transfer of title from a homeowner to a beneficiary.

The property may be kept in trust in some situations. In the event of the trust creator’s death, the trust instrument will specify who would inherit the trust’s property.

A Transfer on Death Instrument is another option for transferring titles when someone dies. In this case, the Recorder of Deeds is notified that the property will pass to a certain beneficiary. Property can be transferred swiftly and easily using Transfer on Death Instruments.

Find Out How Much Is Owed

You should always verify the amount owing on a mortgage before taking over a foreclosure after the demise of the mortgage holder to make sure you are making a sound financial decision. The lender likely requires a death certificate to verify the person’s death. Additionally, it would help if you verified that you are the legitimate heir to the property, whether it is through a will or state law.

It is up to you to decide whether or not to assume responsibility for the loan after receiving all the pertinent information from the lender.

Figure Out If a Case Has Been Filed

Check with your county recorder’s office to determine if an asset has gone into foreclosure because the borrower died. Foreclosure proceedings often necessitate the filing of legal paperwork with the county clerk’s office. These documents are available to the general public.

How Will a Foreclosure Defense Lawyer Help You?

Family members who have lost a loved one must not only grieve but also carry out the deceased’s final wishes and settle their financial affairs. As the most important asset a person owns, a home is often left behind when someone passes away, leaving the family with some difficult options. What will happen to the family if the mortgage cannot be paid?

If a borrower has passed away and you are in danger of losing your home to foreclosure, you have a few options and should be aware of your responsibilities and rights. The queens foreclosure attorneys at Radow Law Group, P.C. are familiar with the foreclosure process and can assist you. If you’ve inherited a foreclosed residence from a deceased relative and are unsure what to do, you should get legal counsel immediately.

For the foreclosure defense attorneys of Radow Law Group., the grief of losing a loved one and dealing with the legalities of probate law is enough. As a result, you shouldn’t have to deal with a foreclosure on your own. For a free consultation, call our office immediately.

Frequently Asked Questions

Q) How To Stop Foreclosure After the Death of a Mortgage Holder?

To stop foreclosure after the death of a mortgage holder, heirs should notify the lender, provide necessary documentation, and explore options such as assuming the mortgage or selling the property.

Q) I Just Inherited A House, So What Should I Do?

If you’ve inherited a house, assess its condition, settle any outstanding debts or taxes, consider your options (keep, sell, or rent), and consult legal and financial professionals for guidance.

Q) How long can a mortgage stay in a deceased person’s name?

A mortgage can remain in a deceased person’s name until the estate settles the debt, or the property is sold or refinanced.

Q) How do I remove a deceased borrower from my mortgage?

To remove a deceased borrower from a mortgage, heirs typically need to provide a death certificate and follow the lender’s procedures for the property’s assumption, refinancing, or sale.

Q) Can you inherit mortgage debt?

Yes, heirs can inherit mortgage debt along with the property, but they are not personally liable for the debt unless they choose to assume it or fail to meet obligations related to the property.