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  1. #1

    Question I Am on Deed but Not Mortgage, and the Mortgage Holder Died - Now What Happens

    My question involves real estate located in the State of: Texas

    I really could not decide where to post this. I hope this is the best forum.

    Four years ago I wanted to buy a house and my Grandmother was going to co-sign. As it turns out my credit was bad enough that we were advised to leave me off the note to get a much better interest rate.

    As a result, my Grandmother obtained the mortgage in her name only. She and I both were on the deed.

    All money (down payment and all payments made) have been made by me. I have been late a few times with payments, however, and recently dangerously so.

    My Grandmother has recently died. Her will directed a 50/50 split of her property between her two children (my mom and uncle). No legal action has been taken by either of them, what money my Grandma had was used for the funeral. She owns another home where she lived when she died.

    I have no idea what happens next, what to do, what to expect. I do not believe I can qualify for a mortgage at this point if the mortgage company wants me to assume the loan or refinance, my income is mainly from student financial aid and while sufficient to make payments, not going to work for a loan qualification.

    To further complicate matters, when I recently fell behind (2 months) and then got caught up, I have since (today) received a notice of 2 certified mail letters needing to be picked up, at the post office, addressed to my Grandmother. I suspect they are from the mortgage company but haven't seen them yet and have no idea what to do about that or what they could be about. They did send regular mail warning me about being in default, before I got caught up. I don't know why they're sending anything after the fact? I suppose that's another issue for a separate post but I thought I'd mention it.

    Anyway, I tried to keep that brief. What do I do?

  2. #2
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    Default Re: I Am on Deed but Not Mortgage, and the Mortgage Holder Died - Now What Happens

    You refinance. If you don't qualify, see if you can get another person (a relative?) to help you (although if you are going to harm their credit by paying late, the odds go down) by cosigning or financing under an arrangement similar to that you had with your grandmother.

  3. #3
    Join Date
    Mar 2008
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    1,995

    Default Re: I Am on Deed but Not Mortgage, and the Mortgage Holder Died - Now What Happens

    If your mortgage is regulated under current Federal law (most are), then you can continue paying the current mortgage. You might check if you can "assume the mortgage" (get it it into your name) based on the death of your grandma. If not, you'll just pay the mortgage under your grandma's name similar to a "sub 2" type transaction, where the deed is under one person's name and the mortgage under another. See the law:

    http://www.law.cornell.edu/uscode/ht...1---j003-.html

    Refer to paragraph (d) subsection 5.

    ************************************************** *****

    (d) Exemption of specified transfers or dispositions

    With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon—

    (5) a transfer to a relative resulting from the death of a borrower;

    ************************************************

    The bank cannot come after you by exercising it's "due on sale" clause, forcing you to refinance the mortgage. You can just continue to pay the mortgage, but one benefit of assuming it if you can do it, and putting it under your name is your credit report would reflect your payment records.

    Normally, your just cannot legally take over a mortgage, but if it is one regulated under Federal law, and most mortgages are, then you can just continue paying this mortgage, as this is one of the SPECIFIC exceptions allowed under the "St Germain Act", particularly if you cannot qualify for a new one. The law envisaged a relative taking over, and living in a deceased relative's home.

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