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  1. #1
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    Sep 2016
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    Default Can a Mortgage Lender Refuse to Allow You To Assume a Deceased Parent's Mortgage

    After their mother passed away, two sisters inherited their mother's home. They contacted their mother's mortgage company to inform it about their mother's passing and to inquire about taking over the mortgage. The mortgage lender said that they could not assume the mortgage. It stated that it was exempt from the law that required lenders to allow heirs to assume a relative's mortgage. Are there in fact any banks or mortgage companies that are exempt from that legal requirement?

  2. #2
    Join Date
    Sep 2005
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    Default Re: Can a Mortgage Lender Refuse to Allow You To Assume a Deceased Parent's Mortgage

    The federal law (the Garn-St. Germain Depository Institutions Act of 1982) that imposes the requirement that heirs be permitted to assume a mortgage is very broad.
    Quote Quoting 12 U.S.C. Sec. 1701j–3
    (a) Definitions

    For the purpose of this section— ...

    (2) the term “lender” means a person or government agency making a real property loan or any assignee or transferee, in whole or in part, of such a person or agency;...

    (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;

    (6) a transfer where the spouse or children of the borrower become an owner of the property;...
    It is difficult to come up with fact scenarios in which a mortgage lender would be permitted to accelerate the mortgage under the facts you have shared.

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