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What Happens If the Person Who Passed Still Had a Mortgage?

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A mortgage doesn't automatically go away when someone passes away. This surprises a lot of families.

Keep these paid while the estate is settled

  • The mortgage payment. Missed payments can lead to late fees and, eventually, foreclosure.

  • Homeowners insurance. Make sure the policy stays active. Tell the insurance company the owner has passed and whether the home is empty, and ask what's covered.

  • Property taxes. They still come due.

Can the lender demand the whole loan be paid off right away?

A federal law, the Garn–St Germain Act, generally stops a lender from calling the full loan due just because a home with 1–4 units passes to a relative after the borrower's death. Your attorney can tell you how it applies to your family.

What happens when the house sells?

When the home is sold, the mortgage is paid off from the sale at closing. What's left goes to the estate.

If payments have already fallen behind

Act quickly. Talk with a probate attorney and the lender right away. If a Notice of Default has been recorded, there are timelines that matter. (See my post about my sister's house.)

I've helped many families through this, and I'll help you understand your options.

I'm not an attorney and can't give legal advice. I work alongside families and their attorneys to sell the home and keep things moving.

Read more: Help after a Notice of Default

Helen K. Burke, REALTOR® | Residential Sales, Probate & Trust, NOD


Intero Real Estate | DRE #01175866 | 408-835-8967

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