Inherited home, but it still has loan on it

[Abster]

Georgia.

As the title stated, I recently inherited my mother's estate in a will and her home was pretty much the entire estate. The house was paid off at one point and as explained to me by the bank that issued that loan, this current loan is not a mortgage. It's a consumer loan that she used the house as collateral (yes, the interest on it is horrible).

How will this loan effect transfering the property to my name ? What exactly is to be done about the loan itself seeing how it's a loan for someone who is now deceased, but the collateral for the loan was left to someone else via a will ?

Does the loan get transfered to me now ? Does the loan remain in her name even though the property has been transfered to my name through the county ? Can the bank (lender) attempt to close the loan (consider it foreclosed) ? Force a sale of the home ?

As you can tell I'm really lost here on this issue. I went to the bank the loan was through and spoke with them and they didn't really tell me anything (I seriously got a bunch of shrugged shoulders and "I duh know". I also spoke with someone at the county over transfering the property to me and she had no answers and told me to speak with the lender on that matter.

Also, a friend suggested to me to get a loan myself to pay off that one, but that's impossible for me. I'll admit, due to a stint of being unemployed a couple of years ago my credit is very nasty. There's no way I could get a loan right now.

 

[ShyCat]

The loan isn't just going to simply go away, it has to be paid. The loan company doesn't care who pays it, just that it gets paid. If not paid, they can and will pursue legal remedies, including foreclosure on the collateral (house).

 

[Abster]

Hey,

Yeah, I wasn't trying to get out the loan and for the last few months I've been going up the bank making the payments, which I'll continue to do.

I was mostly wondering if this outstanding loan can or will effect me.

ie...house in my name, loan against the house in her name. Would that prevent me from ever taking a loan against the house in my name if some emergency came up ?

Not that I'm planning on doing that, but just as an example.

 

[JETX]

How will this loan effect transfering the property to my name ?

Shouldn't have any effect. The ownership of the property really has nothing to do with the obligation to repay what is called an 'equity loan'.

What exactly is to be done about the loan itself seeing how it's a loan for someone who is now deceased, but the collateral for the loan was left to someone else via a will ?

The loan obligation remains.

Does the loan get transfered to me now ? Does the loan remain in her name even though the property has been transfered to my name through the county ? Can the bank (lender) attempt to close the loan (consider it foreclosed) ? Force a sale of the home ?

The loan and the obligation remain. The authorized representative of your mothers estate needs to contact the lender/creditor and advise them of her death. They will then either agree to allow continued payments or, depending on the loan agreement, accelerate payments and 'demand' the loan to be paid.

 

[TrustUser]

hi jetx,

can a bank call a loan due, when the property is inherited ?

 

[nextwife]

Once you own it, you have the option of refinancing the loan to reduce the rate.

The real estate is secured so, if the debt is not paid, the house will be foreclosed. THAT is the recourse available to the bank if the estate cannot pay/payoff the loan.

 

[FlyingRon]

They can not call the loan. There is a federal preemption on due-on-sale clauses on property transfers to relatives due to the death of the borrower.

 

[JETX]

Flying ron is correct... and I was NOT correct.

The law that FR was referring to is the 'Garn-St. Germain Depository Institutions Act'. It waives any 'acceleration' clause on change of ownership due to inheritance or trust transfer.

Send your lender a copy of your father's death certificate and advise that you will be taking over the mortgage payments.