What Happens When The Sole Owner Of A House With An Upside Down Mortgage Dies?

[haha]

What Happens When The Sole Owner Of A House With An Upside Down Mortgage Dies?

Ha

[W2R]

I am not a lawyer, but I would assume that before any distributions could be made, the estate would pay off the mortgage along with other debts of the estate, wouldn't they?

[youbet]

Quote:

Originally Posted by haha What Happens When The Sole Owner Of A House With An Upside Down Mortgage Dies? Ha

He/She spends eternity in the dark silence of death.

Why do you ask? I thought you were renting.......

[haha]

Quote:

Originally Posted by youbet He/She spends eternity in the dark silence of death. Why do you ask? I thought you were renting.......

God, everything I say isn't necessarily my personal situation.

[freebird5825]

Quote:

Originally Posted by Want2retire I am not a lawyer, but I would assume that before any distributions could be made, the estate would pay off the mortgage along with other debts of the estate, wouldn't they?

I agree. Also not a lawyer, but served as an Alternate and primary Executrix for 2 estates, with legal counsel all throughout to keep me straight and fully legal.
The Executor has a duty to satisfy all outstanding debts prior to doing any distributions from the estate. There could be other factors involved, like mortgage insurance on the sole owner's life to pay off the outstanding principal.
My guess (out on a slender limb here) is the lender will take possession of the house by default unless the estate continues the mortgage payments until the probate process is completed.
What I don't know is if other estate assets, like house contents and tangible property and bank accounts and investments, can be appropriated to satisfy the balance.

[Martha]

The lender will likely foreclose and depending on state law may or may not be able to file a claim for a deficiency against the estate.

[youbet]

Quote:

Originally Posted by haha God, everything I say isn't necessarily my personal situation.

Just wanted to see if you were reading the responses..........

BTW, good question.

[honobob]

Quote:

Originally Posted by Martha The lender will likely foreclose and depending on state law may or may not be able to file a claim for a deficiency against the estate.

I do not believe there is any jurisdiction in the United States that would allow a foreclosure because of the death the owner.

[bubba]

Quote:

Originally Posted by honobob I do not believe there is any jurisdiction in the United States that would allow a foreclosure because of the death the owner.

I'm confused; why wouldn't there be a foreclosure? I'm pretty sure the mortgage holder wouldn't write off the debt and release the deed. I think the bank would foreclose unless the estate was making the mortgage payments.

[cashflo2u2]

The lender could institute any legal remedy available to it inluding foreclosure if the mortgage went into default. For what constitutes a default what are remedies you would have to read the note and mortgage. The most common default of course is non payment of amounts when due. I suppose even death or insolvancy of the debtor could be and event of default. I sure that death itself does not wipe out any deficiency. Of course as another poster stated the deficiency obligation could be different depending on the State- Ca. being a notable one. I'm not a lawyer either.

[ChrisC]

I figured it wouldn't take long for confusion to occur over a simple question, where the simple answer is to consult a lawyer, in the jurisdiction where the property is located or where the individual's estate might be probated, and not troll for legal advice over the internet.
Bring all relevant papers to the lawyer such as the deed, promissory note, mortgage/lien instruments, mortgage balance statements from the servicer, tax bills, divorce decrees, outstanding judgments, and a will, if one exists.

In the space of a few posts, we've covered a lot more than 1st year law students would cover in a real property class during the first week of law school: decedent estate distribution, mortgage foreclosures, deficiency judgments, abatements for actions caused by death of a debtor, events of defaults under promissory notes or mortgage/lien/trust deed instruments, and someone was on the verge of bringing in civil procedure concepts of in rem actions against the property staddled with a lien or in personam actions against the estate of the decedent.

[Martha]

Quote:

Originally Posted by honobob I do not believe there is any jurisdiction in the United States that would allow a foreclosure because of the death the owner.

I said "likely" foreclose. The lender is upside down, why would the estate try to sell the house when there isn't anything in it for the heirs?

Chris has a good point, it all is a matter of state law which varies. Nevertheless, if the property is worth less than the debt it is most likely that the lender will end up foreclosing at some point. Maybe a deed in lieu is possible from the personal representative, but what I have seen most often is the heirs walk away and the lender forecloses. At least this was true in the two states where I was licensed.


Don't forget my signature.

[Martha]

Quote:

Originally Posted by ChrisC In the space of a few posts, we've covered a lot more than 1st year law students would cover in a real property class during the first week of law school: decedent estate distribution, mortgage foreclosures, deficiency judgments, abatements for actions caused by death of a debtor, events of defaults under promissory notes or mortgage/lien/trust deed instruments, and someone was on the verge of bringing in civil procedure concepts of in rem actions against the property staddled with a lien or in personam actions against the estate of the decedent.

Not that there is anything wrong with that. People here are curious about how things work, whether it is taxes, treatments for prostrate cancer, financial planning, to whatever someone can dream up next. I don't think the curiosity is trolling for advice and specifically I don't think Ha is trolling for legal advice, he is just curious as to what may happen.

[haha]

Quote:

Originally Posted by Martha Not that there is anything wrong with that. People here are curious about how things work, whether it is taxes, treatments for prostrate cancer, financial planning, to whatever someone can dream up next. I don't think the curiosity is trolling for advice and specifically I don't think Ha is trolling for legal advice, he is just curious as to what may happen.

This is correct, Martha. While I do own property, there is no debt on it, and I live in an apartment.

Quote:

Originally Posted by ChrisC I figured it wouldn't take long for confusion to occur over a simple question, where the simple answer is to consult a lawyer, in the jurisdiction where the property is located or where the individual's estate might be probated, and not troll for legal advice over the internet.

By this logic, 90% of the threads on the board would disappear.

Ha

[Sarah in SC]

But I like to troll for advice, if not legal, then at least travel, leisure, investment, or other activities. Ha's right--why else would we be here? For the biscuits and gravy?

I kinda liked youbet's answer, though. That pretty much sums it up.

[Westernskies]

Quote:

Originally Posted by Sarah-in-SC Ha's right--why else would we be here? For the biscuits and gravy?

My advice is a side of bacon with that.

[Bestwifeever]

Biscuits and gravy on the one hand, Wednesday weigh-ins on the other. Where else can you get that kind of debate?

[ChrisC]

Quote:

Originally Posted by Sarah in SC But I like to troll for advice, if not legal, then at least travel, leisure, investment, or other activities. Ha's right--why else would we be here? For the biscuits and gravy? I kinda liked youbet's answer, though. That pretty much sums it up.

Sorry if my post might have implied that there was something wrong with trolling for advice. I'm pretty sure people aren't here just for biscuits, gravy, ham or bacon or for seeking advice. And I'm pretty sure some of us are here because they also like to occasionally hear themselves post (including me sometimes) -- not that there's anything wrong with that either.

[huskerblue]

$E

[clifp]

I for one was curious as to the answer. Personallly, I am inclined to believe the lawyers on the forum, despite (or maybe because of) their disclaimer.