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Next of Kin: The Garn-St. Germain Act

Generally, unless you are a signing borrower on a defaulted mortgage note, you may only save your home from impending foreclosure by either paying off the mortgage loan or, at the least, reinstating the mortgage loan; that is, paying the amount necessary to bring the mortgage loan current. In other words, a mortgage lender typically has no legal obligation whatsoever to a non-borrower, even if the property is the non-borrower’s primary residence, to negotiate a loan modification—a new written agreement adjusting various terms of the existing promissory note and mortgage such that the monthly mortgage loan payments become more affordable.

If a sole borrower dies leaving behind relatives who are still living in their family home, paying off, or at least reinstating, a defaulted mortgage loan is often not financially feasible, especially if the surviving family members had been dependent on the income of the now-deceased borrower.

Fortunately, an exception exists for the next of kin of a deceased borrower under a federal law commonly referred to as the Garn-St. Germain Act.

Under the Garn-St. German Act, the surviving spouse or children of a deceased borrower who become the owner—whether outright or through a trust—of residential real property upon the passing of the borrower are eligible to assume the mortgage loan; that is, to have the mortgage loan transferred out of the name of the deceased borrower into the name of the surviving spouse or children. Upon assumption of the mortgage loan, the surviving spouse or children are then eligible to apply for a loan modification. Typically in these instances, an assumption and modification of the mortgage loan actually may be submitted simultaneously to the mortgage lender, instead of first having to apply for an assumption and subsequently applying for a modification.

If you are the surviving spouse or child of a deceased borrower and are facing foreclosure of your family home, Loan Lawyers, LLC may be able to help you avoid foreclosure by obtaining an assumption and modification of the mortgage loan. Dealing with the loss of a loved one is traumatic enough; don’t add the loss of your home to your grief. Please contact us today to schedule a free consultation to discuss your available options. We want to help keep you in your family home.