[WSBAPT] Today's Topic - Transfer of mortgage and application of Garn St. Germain Act

[Marcus Fry]

You are correct, that the Garn St. Germain Act is to bar the triggering of the due on sale clause.  As far as dealing with the loan going forward it largely depends on the bank and whether the person inheriting likes the terms of the loan (whether good interest rate, the property would not be loanable now due to type/condition, etc.)  If the client wants to keep the loan for whatever reason, I simply have a deed done from the estate (usually after giving bank Notice to Creditors and having the 4-month period run) and have client keep making payments as to my knowledge, the bank is not to allow actual assumption of the loan via change of debtor/obligor.  Now the bank, may upon learning of the death, be eager to rework the loan with the new client due to change in interest rates, etc. as opposed to an assumption.  I have on occasion had a client assume the loan but it does take time and can be a headache because the bank's privacy rules generally impede dealing with the client even if the client is the Personal Representative.  I don't believe the assumption cost my client anything financially, but it did take a great deal of time.

Marcus J. Fry
Lyon, Weigand & Gustafson, P.S.

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From: wsbapt-bounces at lists.wsbarppt.com [mailto:wsbapt-bounces at lists.wsbarppt.com] On Behalf Of Robert West
Sent: Tuesday, July 11, 2017 1:13 PM
To: wsbapt at lists.wsbarppt.com
Subject: [WSBAPT] Today's Topic - Transfer of mortgage and application of Garn St. Germain Act

I understand under the Garn St. Germain Act the lender cannot exercise the "due on sale" clause in the event of a transfer pursuant to a divorce decree, but does this release the spouse not retaining the property from potential future liability under the loan? I would think not. Is the lender automatically obligated to approve an assumption by the spouse awarded the property?

Robert E. West, Jr.
West Law Offices, P.S.
332 1st St NE
Auburn, WA 98002
(253) 351-9000
rwest at westlawoffices.com<mailto:rwest at westlawoffices.com>
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