HomeThe mortgage when the owner dies
Georgia probate guide
What happens to the mortgage when the owner dies?
The short answer
Take a breath, and keep the payments going. For most home loans, a death alone doesn't let the lender demand the whole balance. Federal law blocks that when the house passes to a relative or a joint owner. Write to the company you pay, the servicer. Ask what it needs to confirm you as a successor in interest. A reverse mortgage works another way. It comes due at the death.
By Georgia Probate Specialist team
On this page
Does the loan come due when the owner dies?
Most home loans have a due-on-sale clause. It lets the lender ask for the whole balance if the house changes hands without its okay.
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Federal law makes room for a death. For a home with fewer than five units, the lender can't use that clause when the house passes to a relative at the owner's death. The same goes when it passes to a joint owner, or when a spouse or child becomes an owner.
The loan itself stays. A payment still comes due each month. If the payments stop, the lender can still foreclose, which means it takes the house to pay the debt.
Ask the servicer to confirm you
The servicer is the company that sends the bill and takes the payments. Federal rules call a relative who gets the house this way a successor in interest. Once the servicer confirms you, its servicing rules treat you as a borrower.
Your letter
Write to the servicer. Give the owner's name and the loan number. Say you may be a successor in interest. Keep a copy.
Its answer
The servicer must tell you in writing which papers it needs to confirm who you are and your share in the house. It must give you a phone number too.
Your papers
Send what it asks for. Keep copies, and write down who you talked to and when.
Next
Ask in writing whether you are now confirmed. Keep the answer with the loan papers.
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Do this in writing. A letter leaves a trail, and the rules for an answer turn on a written request.
Being confirmed doesn't make you owe the loan
Under federal rules, a confirmed successor in interest doesn't owe the mortgage unless they take it over. That step is called assuming the loan.
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The loan stays tied to the house, though. If no one pays, the lender can still foreclose on the house.
Whether to keep the house with its loan or sell it is the family's call. A probate lawyer can explain what assuming the loan would mean for you.
Who pays while the estate is open
The payments keep coming while probate runs. If the family can, keep them on time.
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If a family member pays before anyone has letters, keep every receipt. Ask a probate lawyer whether the estate can pay that person back.
Many loans also collect the property tax and the insurance in the monthly payment. Ask the servicer if yours does, so those don't lapse.
If the house sits empty while you sort out the loan, it still needs looking after. We can go by, check on it and send you photos.
If it is a reverse mortgage
A reverse mortgage is a loan the owner drew against the house. For the kind insured by HUD, the loan comes due when the last borrower dies. The lender sends a notice. Then the family has 30 days to pick one of these.
- Pay off the loan and keep the house.
- Sell the house. The lender can't require a price higher than 95% of the appraised value.
- Hand the house to the lender.
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The rules expect foreclosure to start within 6 months of the loan coming due, unless more time is approved. A spouse who was not on the loan may have other rules. Call the lender early, and keep every letter it sends.
Quick answers
Questions people ask
Can the bank take the house when my mom dies?
Not just because she died, for most home loans. Federal law stops the lender from calling the loan due when the house passes to a relative. If the payments stop, the lender can still foreclose. A reverse mortgage is different.
Do I have to refinance my parent's mortgage?
Not just because the house passed to you at a death. For most home loans, the lender can't call the loan due for that reason. Ask the servicer in writing to confirm you as a successor in interest.
Am I responsible for my dad's mortgage?
Not on your own money, unless you take the loan over. Federal rules say so for a confirmed successor in interest. The loan stays tied to the house, so the lender can foreclose if no one pays.
Will the mortgage company talk to me if I'm not on the loan?
Write to the servicer and say you may be a successor in interest. It must answer in writing with the papers it needs and a phone number to call.
What happens to a reverse mortgage when the owner dies?
It comes due when the last borrower dies. After the lender's notice, the family has 30 days to choose what happens to the house. The section above lists the choices.
Where these facts come from7 sources
This page explains how things work. It is not legal advice. Each fact here comes from one of these sources.
- 12 U.S.C. § 1701j-3(d), a lender can't call a home loan due because the house passed to a relative at a death
- 12 CFR 1024.31 (CFPB Regulation X), who counts as a successor in interest
- 12 CFR 1024.30(d), a confirmed successor in interest is treated as a borrower
- 12 CFR 1024.36(i), the servicer must answer a written request from a possible successor in interest
- 12 CFR 1024.38(b)(1)(vi), servicer duties after a borrower dies
- 12 CFR 1024.32(c), a confirmed successor in interest doesn't owe the loan unless they take it over
- 24 CFR 206.125, reverse mortgage (HECM) after the borrower dies