QUESTION
Will the bank let us keep our home on mortgage if my husband’s father passes and has my husband as beneficiary of home?
Asked on Mar 05th, 2014 on Estate Planning - Michigan
More details to this question:
My husband has dual power of attorney over his dad. His dad is passing away. We live in the home his dad has a mortgage on. My husband is the only heir and his dads will states that everything goes to my husband when he passes. Will we have to sell our home we live in or does the bank let us keep paying the payments, taxes and insurance like they know we have done all along?
18 ANSWERS
3 Awards
Is the loan assumable? For first step is to know the answer to that....
Answered on Mar 06th, 2014 at 5:30 PM
Usually, the bank will do nothing so long as payments are made. If your father-in-law is mentally competent, I suggest that he set up a trust now and transfer the house and all of his assets into the trust before he dies. That way you can avoid probate.
Answered on Mar 06th, 2014 at 5:30 PM
Banks used to transfer the mortgage to the new owner. Now most of them require that the mortgage be paid off. You can do that by getting a mortgage in your own names and using the money to pay off the previous loan. You would then make payments on the new mortgage, along with taxes, etc.
Answered on Mar 06th, 2014 at 2:18 PM
Commercial Contracts Attorney serving Boise, ID
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Peters Law, PLLC
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It is for the bank to decide, but in all likelihood, the bank will continue to allow you to pay since it doesn't want the house, it wants the money. You may want to consider talking with local mortgage brokers to see if you might get a better deal.
Answered on Mar 06th, 2014 at 2:04 PM
Admiralty / Maritime Attorney serving Monrovia, CA
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The Law Office of Nathan Wagner
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The bank will have to let you keep making payments and keep living in the house. But if you default on the loan, they can foreclose on the house. ?
Answered on Mar 06th, 2014 at 1:53 PM
Thomas Edward Gates
As long as you are able to pay the mortgage, you may stay in the house. The bank cannot force you to accelerate the payments. Make sure that there is a Quit Claim transferring the home to your husband.
Answered on Mar 06th, 2014 at 1:47 PM
Probate Attorney serving Newport, OR
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Minor, Bandonis & Haggerty P.C.
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Probably not. A federal law called "Garn-St.Germaine" (12 USC ? 1701j-3) says that transfer to a relative on the death of the borrower does not trigger the "due on sale" clause of the mortgage. You will take the property subject to the mortgage, but as long as you keep paying the mortgage, taxes and insurance you should be alright. That said, you'll be better off refinancing if you can.
Answered on Mar 06th, 2014 at 1:46 PM
The bank is certainly not obligated to permit you to continue making payments. The mortgage has a due on sale clause (in all likelihood). Under the due on sale clause, the bank could insist on immediate payment of the entire unpaid balance.
Answered on Mar 06th, 2014 at 1:45 PM
Creditor's Rights Attorney serving Clayton, MO
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Fluhr & Moore, LLC
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If you keep paying the note, insurance and taxes, then the bank will probably take no action.? You may want to check with a financial advisor or attorney to see if you would be better off refinancing the property in your names.
Answered on Mar 06th, 2014 at 1:45 PM
2 Awards
Generally, death triggers a due on sale clause. That would mean your husband would have to get a loan to refinance the property in order to keep it. That said, practically, if the mortgage, taxes and insurance are being paid on the property, the lender does not enforce the due on sale clause. There are no guarantees however. If your husband wants a guarantee, he needs to qualify for a loan and refinance the property once it becomes his. At James Law Group we make every effort to respond to you quickly and efficiently. This means we may be responding to you from a mobile device. As you know, responding on these devices can result in typographical errors that my otherwise not occur. In order to provide this extra service, please be aware of this and excuse any errors that may be caused by responding in this forum.
Answered on Mar 06th, 2014 at 1:44 PM
Trusts Attorney serving Sacramento, CA
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Law Office of Victor Waid
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You need to consult with your bank.
Answered on Mar 06th, 2014 at 1:43 PM
Edwin K. Niles
While there may be a due on transfer clause in the promissory note, the banks don't usually enforce it. They mostly just want the payments to keep coming in.
Answered on Mar 06th, 2014 at 11:27 AM
Commercial Attorney serving Chicago, IL
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Ashcraft & Ashcraft, Ltd.
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The lender may not know that you have been paying the mortgage and other expenses. While the borrower is alive the lender probably does not care. The mortgage will have a due on sale clause that the lender can exercise when it learns that the borrower is deceased and another person now owns the property. The lender may or may not exercise its right to call the loan but it could do so at any time. The fact that it does not do so right away, or even for several years, does not affect its right to call the loan. You should look into refinancing the house. The property will be transferred to your husband after his father passes. The property will pass with the loan burdening the property. Does your father-in-law have other assets to pay creditors, including medical bills relating to his last illness. The property may have to be sold to pay other claims against your father-in-law. If your father-in-law is residing in an extended care facility with expenses being paid by Medicaid, then Medicaid may have another lien on your father-in-laws property.
Answered on Mar 06th, 2014 at 11:18 AM
Business Planning Attorney serving Livonia, MI
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Frederick & Frederick Attorneys at Law
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Hello~ You will not need to sell the home. You can simply continue to make payments and the bank cannot do anything about that. Unfortunately, in order to get your names on the title, you will need to go through probate, in order for the Will to be effective. This may cost a fair amount of money. If your father-in-law still has capacity, he can execute a form of quit claim deed that would allow you to take title automatically, upon his death. This deed is not expensive to get, and could save you significant amounts of money, time and hassle. If your father does not have capacity, you may not be able to avoid probate, at this point.
Answered on Mar 06th, 2014 at 9:38 AM
Probate Attorney serving New Orleans, LA
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James G. Maguire
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Read the terms of the present mortgage. It may require you to notify the bank when your husband's father dies. If that is the case, your husband will have to qualify to hold the mortgage in his name.
Answered on Mar 06th, 2014 at 9:38 AM
Taxation Law Attorney serving Glendale, CA
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Irsfeld, Irsfeld & Younger LLP
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You will be able to continue. Be sure to notify the county assessor after his death, so the property taxes won't go up.
Answered on Mar 06th, 2014 at 9:37 AM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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That will depend on the bank and the terms of the mortgage. Generally there is a "due on sale" clause which means the mortgage will have to be paid off or refinanced if there is a transfer of title.
Answered on Mar 06th, 2014 at 9:37 AM
Neal Michael Rimer
Your husband will be inheriting the residence from his father. The bank may not exercise the due on sale clause in the note and deed of trust due to a transfer through the probate of the property by operation of law. You will be able to get title into your husband's name and will be able to continue to pay the mortgage, taxes and insurance... So, don't worry.
Answered on Mar 06th, 2014 at 9:37 AM