ozaudio

inherited fathers house

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I inherited my fathers home and found out he had a HELOC on it, my credit is not good. The loan is current and nothing is delinquent.  What is the bank likely to say when I tell them he has passed away? Are they likely to tell me I have to pay in full immediately or let me pay the monthly payments?

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You would need to read the contract to be sure but most likely, there is an acceleration clause in the contract which allows the bank to demand the full amount should the debtor pass away. That means they will probably demand the full amount, even if the loan is otherwise current. They will also find out that the debtor passed away eventually anyways, regardless of whether you try to keep that information from them or not so best to be honest.

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In order to transfer title, you will be required to pay off the loan.  However, I had a friend that passed away and the payments on his house were kept current, and the mortgage company never asked for full payment until title was transferred.

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The paperwork that I could find says nothing about the debtor passing away, mostly about keeping the property insured and in good condition and keeping the payments current. Also about fees if paid off early but nothing on the debtor passing away.

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So I spoke to a real estate attorney and he stated there is a us code   12 us code 1701j-3  called the Garn St. Germain act, lots of info there but it prevents banks from asking for full payment and allows you to continue to make payments. He was saying that a lot of people can inherit a home that still has a large mortgage on it and there was nothing preventing banks from taking peoples homes away from them. There is also a lot of other things in this bill. Hope this helps someone else out.

 

 

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I see it, section d paragraph 5. The bank may not exercise a due on sale clause because of the death of a borrower.

This was passed during the higher interest days of the 80s and was to prevent sellers from simply offering buyers to take on their low interest rate mortgage in states which banned such provisions (pre-empting state law). However, they put in certain exceptions and inheritance is one of those.

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