What happens to a mortgage when the borrower dies?

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What happens to a mortgage when the borrower dies?

Due to my brother’s financial situation, my mother (who is 76 and working part-time) took out a mortgage in her name for a townhouse. If she were to pass, would her estate pay off the mortgage? His name is also on the deed.

Asked on July 30, 2011 Massachusetts

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

His name being on the deed is only one issue. You need to find out how they own the home together (tenants in common or joint tenancy). Next, if the loan is only in her name, the home is still partially in her name (assuming a tenancy in common) and the mortgage company can and will attempt to take its home (the home is security via the mortgage on the note evidencing the loan). This is when you need to find out if your mother has any specific insurance on the property that insures her so that if she passes (excluding certain types of ways) the insurance company would pay for the mortgage (pay off the loan). Further, your brother would not be required to pay on the mortgage (if it passes to him) but oftentimes upon transfer to someone else (like in a will), the mortgage can be called (it basically accelerates the due on transfer clause).

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

His name being on the deed is only one issue. You need to find out how they own the home together (tenants in common or joint tenancy). Next, if the loan is only in her name, the home is still partially in her name (assuming a tenancy in common) and the mortgage company can and will attempt to take its home (the home is security via the mortgage on the note evidencing the loan). This is when you need to find out if your mother has any specific insurance on the property that insures her so that if she passes (excluding certain types of ways) the insurance company would pay for the mortgage (pay off the loan). Further, your brother would not be required to pay on the mortgage (if it passes to him) but oftentimes upon transfer to someone else (like in a will), the mortgage can be called (it basically accelerates the due on transfer clause).


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