It’s never easy to lose a loved one, and the emotional toll can be unbearable. You might be left wondering about the practical things, like what would happen to the mortgage if your spouse passed away and your name is not on it, in addition to grieving. Although you may find yourself in a perplexing and stressful situation, there are laws and safeguards in place to assist you.
Understanding the Situation
Let’s first understand the situation you’re facing. Your husband has passed away, and you’re not listed on the mortgage for your home This means that legally, you are not obligated to make the mortgage payments. However, the lender still has the right to foreclose on the property if the payments are not made.
Your Options
So what are your options in this situation? Here are a few things you can consider:
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Continue making the mortgage payments: If you can afford it, you can continue making the mortgage payments as usual. This will keep the lender happy and prevent foreclosure
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Refinance the mortgage: You can also refinance the mortgage into your own name. As a result, you will become the sole owner of the house and be liable for all mortgage payments. But, you will have to meet the requirements for the refinance on your own, which could be challenging if you don’t have a good credit history or a steady source of income.
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Sell the home: If you don’t want to keep the home, you can always sell it. This will allow you to pay off the mortgage and use the remaining equity for other purposes.
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Consult a lawyer: It’s best to consult a lawyer who specializes in probate and estate law if you’re unclear about what to do. They can assist you in weighing your options and selecting the course of action that will work best for you.
Legal Protections
It’s critical to understand that surviving spouses who are not mortgage holders are protected by law. These protections vary by state, but they generally allow you to:
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Receive the property: Should your spouse have left a will, it might indicate that you will inherit the house. You might be able to inherit the property even if he didn’t have a will thanks to intestate succession laws.
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Assume the mortgage: Under the Garn-St. Germain Depository Institutions Act of 1982, even if you are not a borrower, you might be eligible to take over the current mortgage. This means that you would become personally liable for the debt.
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Get information about the mortgage: The lender is required to provide you with information about the mortgage, even if you’re not on the loan. This includes the amount of the outstanding balance, the interest rate, and the payment history.
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Apply for a loan modification: If you’re struggling to make the mortgage payments, you may be able to apply for a loan modification. This could allow you to lower your monthly payments or extend the term of the loan.
Resources and Support
There are many resources available to help you navigate this difficult situation. Here are a few:
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The National Consumer Law Center: This organization provides free legal information and resources on a variety of topics, including mortgages and foreclosure.
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The Department of Housing and Urban Development (HUD): HUD offers a variety of programs to help homeowners, including those who are facing foreclosure.
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Your local housing authority: Your local housing authority may be able to provide you with information and resources on affordable housing options in your area.
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Support groups: There are many support groups available for people who are grieving the loss of a loved one. These groups can provide you with emotional support and practical advice.
Losing a loved one is never easy, and dealing with the financial implications can be overwhelming. However, it’s important to know that there are laws and protections in place to help you navigate this difficult situation. By understanding your options and seeking legal advice, you can make informed decisions about your future.
Frequently Asked Questions
- What happens if I can’t afford to make the mortgage payments?
If you can’t afford to make the mortgage payments, you may be able to apply for a loan modification or forbearance. You can also sell the home or try to rent it out to generate income.
- What happens if I don’t want to keep the home?
If you don’t want to keep the home, you can sell it or try to rent it out. You can also deed the property back to the lender through a “deed in lieu of foreclosure.”
- What if my husband’s will says that I don’t inherit the home?
If your husband’s will says that you don’t inherit the home, you may still be able to challenge the will in court. You should speak with an attorney to discuss your options.
- What if I’m not sure what to do?
If you’re not sure what to do, it’s best to seek legal advice from an attorney who specializes in probate and estate law. They can help you understand your options and make the best decision for your situation.
Responsibilities of an Heir vs. Executor When It Comes to a Mortgage
Anyone who receives money or property through a will or intestate is considered an “heir,” but they have no control over the estate or the sale of the assets. After paying all claims, the executor—referred to as a “personal representative” in some states—manages the estate and gives the heirs the remaining funds and assets.
You also inherit the mortgage debt if you inherit a home and you previously signed the promissory note and mortgage for that property. On the other hand, the loan will be paid off if your spouse or any other deceased borrower had mortgage protection insurance.
But what if you inherit a property but your name isn’t on the mortgage and note? There are a number of laws that can assist you in this process if you decide to keep the property by taking over the mortgage loan (and also help you avoid foreclosure)
The Ability-to-Repay Rule Doesn’t Apply to Loan Assumptions
For instance, the CFPB issued an interpretive rule that helps an heir assume a deceased borrowers mortgage after inheriting a home. (In the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Congress established the CFPB and gave it the authority to adopt new rules to protect consumers in mortgage transactions.)
The individual who inherits the house may be added to the loan as a borrower after the original borrower passes away without the ability-to-repay (ATR) rule coming into play. Mortgage lenders are now required by the ATR rule, which became operative on January 10, 2014, to confirm that a borrower can afford a mortgage before granting a loan.
Some heirs could not be added to the loan if the lender was required to follow the ATR rule following the death of the borrowing spouse or another relative. This is because the lender would have to take into account whether the heirs could repay the debt.