[WSBAPT] probate question - single spouse on mortgage

Sun May 24 14:08:12 PDT 2015

Thank you – this is very helpful, and it makes sense. I wonder if anyone has seen any problems arise in practice. 

Sharon C. Rutberg

Attorney at Law

1718 NW 56th Street, Suite 304

Seattle, WA 98107

Website:  <http://www.sharonrutberglaw.com> www.sharonrutberglaw.com 

206-409-2604

 <mailto:email at sharonrutberglaw.com> email at sharonrutberglaw.com

Washington State Bar #47055
D.C. Bar #420576

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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of MK Henderson
Sent: Sunday, May 24, 2015 11:50 AM
To: WSBA Probate & Trust Listserv
Subject: Re: [WSBAPT] probate question - single spouse on mortgage

Look at the Garn-St Germain Act following.

12 U.S. Code § 1701j–3 - Preemption of due-on-sale prohibitions

(d) Exemption of specified transfers or dispositions

With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon—

(1) the creation of a lien or other encumbrance subordinate to the lender’s security instrument which does not relate to a transfer of rights of occupancy in the property;

(2) the creation of a purchase money security interest for household appliances;

(3) a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;

(4) the granting of a leasehold interest of three years or less not containing an option to purchase;

(5) a transfer to a relative resulting from the death of a borrower;

(6) a transfer where the spouse or children of the borrower become an owner of the property;

(7) a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property;

(8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or

(9) any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board.

Under 6 if the spouse takes by inheritance the spouse can continue paying on the note. There is a question in your scenario whether the couple own the home as joint with right of survivorship but if the spouse were to die then the transfer of the remaining spouse could continue to pay on the note.  

On Sun, May 24, 2015 at 10:12 AM, Sharon Rutberg <email at sharonrutberglaw.com> wrote:

Hello, Listmates –

Anybody out there this holiday weekend?  

Married couple owns a home as “husband and wife” on the deed, but mortgage is in wife’s name alone (she had the better credit).  They want to know whether, if she dies, he can “just keep making payments” on the existing mortgage. That sounds doubtful to me, and I’d like to understand what will happen. If she dies, will notice have to go to the mortgage company as her creditor? Will the husband (as PR) have to pay off the mortgage using estate funds, or could he refinance it in his own name? 

Thanks very much for your thoughts, and happy holiday. 

Best,

Sharon

Sharon C. Rutberg

Attorney at Law

1718 NW 56th Street, Suite 304

Seattle, WA 98107

Website: www.sharonrutberglaw.com 

206-409-2604

email at sharonrutberglaw.com

Washington State Bar #47055
D.C. Bar #420576

NOTICES
The contents of this message and any attachments may be protected by the attorney-client privilege, work product doctrine, and/or other applicable protections. If you are not the intended recipient or have received this message in error, please notify the sender and promptly delete the message. Thank you for your assistance.

IRS Circular 230 Disclaimer: To ensure compliance with requirements imposed by the IRS, we inform you that to the extent this communication contains advice relating to a Federal tax issue, it is not intended or written to be used, and it may not be used, for (i) the purpose of avoiding any penalties that may be imposed on you or any other person or entity under the Internal Revenue Code or (ii) promoting or marketing to another party any transaction or matter addressed herein.

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-- 

Mary K. Henderson

Henderson Law Office PLLC
1123 Maple Ave SW, Suite 225

Renton, WA 98057

206-650-2472

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