[WSBAPT] Mortgage in different name than Owner at Death - What happens?

[Lisa E Schuchman]

Jen,

How does your client own the property? Did the prior owner deed it to them? If so, it would be subordinate to the DOT. (It’s also possible that a deed violates the terms of the DOT.)

Some lenders, mostly banks in my experience, will allow a non-recourse assumption of a mortgage by a new owner instead of a refinance. Less fuss, less cost, but it still requires some creditworthiness. If the lender doesn’t know that the borrower died, they may continue to accept money, but that doesn’t really clear title to the subsequent owner.

I don’t have a solution, unfortunately, but a receipt or acknowledgment of some kind from the prior owner for the mortgage payments would probably be useful.

Lisa E. Schuchman
206-851-5559

I learn, I give. – Gloria Steinem

On Apr 19, 2019, at 4:05 PM, Jen Doehne <jdoehne at bgwp.net<mailto:jdoehne at bgwp.net>> wrote:

Hello all,
I have a client who owns a house, it is subject to a mortgage in the name of the prior owner.  My client cannot afford to refinance (poor credit, etc) but has been paying the mortgage for over two years now.

The prior owner is elderly and in poor health (and incapacitated).  The prior owner’s daughter is pestering my client telling him that he MUST refinance before her father passes or the mortgage company will force the sale of the house. She also seems to be implying that my client’s only other option is to give the property back to the prior owner…

Other than the fact that the daughter is attempting to stir up trouble… What actually happens if the prior owner dies if my client is unable to refinance? I have done a bit of research and see that the lender cannot force an acceleration for family beneficiaries.  My client is not related to the prior owner. I have taken a look at all the transfer paperwork and it does look to be a valid transfer.

I have a hard time believing that the lender will force the sale of a home when the mortgage has been timely paid for years. Is it likely that nothing will happen and the lender will go on continuing to accept payments?

Thanks so much for your help!
Jen


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