What Do You Do When You Inherit a Home That’s in Default?

Dealing with the death of a family member is one of the most difficult things a person will ever have to go through. The administration of the deceased’s estate, though, can make it even more challenging, particularly financially. It could even involve a foreclosure, or an attempt to stop foreclosure, on the deceased’s home.

Many people don’t talk about money with their loved ones and so, when someone dies, it’s up to the surviving family members to determine what they owe and what assets they have. The home is typically a person’s biggest asset. When a person passes away, it also causes many complications for loved ones. If you’ve inherited a home and think it’s now in foreclosure, or soon going to be, you must speak to a Florida foreclosure defense lawyer as soon as possible.

Why Mortgages Go Unpaid

There are many reasons mortgages are left unpaid after a person passes away. Many times, it’s because family members aren’t aware there’s a mortgage on the property or believe the deceased’s debt is forgiven upon their death. Sometimes, surviving loved ones don’t know who is responsible for making mortgage payments and so they simply ignore it. In some cases, the family members simply don’t want the property.

Whatever the reason for missing mortgage payments, when a mortgage defaults, it’s at risk of foreclosure. This may not be a huge problem if the family didn’t want to keep the home. However, if family members wanted to keep the home or sell it for a profit, foreclosure is a very bad situation. If the deceased was the only one on the mortgage note and family members have an interest in the property, they’ll have to go through probate to get it.

Going Through Probate

Probate is a legal process that determines which heirs receive the deceased’s property upon their death. It also establishes who is responsible for settling the deceased’s debts. Probate is easier and faster if there is a will in place. Even with a will, though, family members must still go through probate to ensure there are no challenges to the will.

During probate, an executor of the estate is named. Wills typically determine who this person is, although if there is no will, a court will decide. Probate can take a long time, particularly when a home is involved, as this is a very large asset. A probate judge will want to ensure the process is done right, and that can take some time.

Once it’s established that certain heirs will keep the home, they will need to record a quitclaim deed. This transfers the interest in the property to the heir that will be responsible for the home. After this process has taken place, the heir that now owns the property can investigate if the home is in danger of foreclosure. If it is, they can then begin the steps to remedy the default.

Remedying a Mortgage in Default

If you have inherited a home that’s in default, you can take the same steps to remedy the situation that you would if your own home was in default. First, if the estate has enough funds, you can use those to simply write the lender a check and get the mortgage out of default. Often, estates do not have enough funds to cover the cost of the mortgage.

When that is the case, one of the first steps often taken is to apply for a loan modification. This is an agreement with the lender that changes the terms of the mortgage. Lower monthly payments, reduced principals, and different interest rates are possible through a loan modification.

You can also choose to apply for a mortgage as the new owner of a home. You do this just as you if you were buying a home. You can apply for a mortgage from a lender, which will then be used to pay off the loved one’s loan. You can then move ahead with your new mortgage. Keep in mind that this mortgage approval will take into consideration your assets, debts, credit, and income. So, if lenders deem you as a risky borrower, this option may not be available to you.

In cases when you don’t want to keep the property, you can ask the lender if they will agree to a short sale or a deed-in-lieu of foreclosure. A short sale will sell the property for less than the amount that’s still owed on the mortgage. At this point, the lender will either forgive the debt, or they may have a deficiency judgment issued against you. This latter option would allow them to garnish your wages and take other steps to try and recover the debt. If the lender agrees to a deed-in-lieu, you will give the deed to the house back to the lender to avoid foreclosure.

Whichever of these options you choose to remedy a defaulted mortgage, it’s important you don’t do it alone. A foreclosure defense attorney can help you negotiate with the bank, get you better terms in a loan modification, and help you through the application processes involved in a short sale or deed-in-lieu.

Inherited a Home that’s in Default? Call a Florida Foreclosure Defense Attorney

Losing someone is painful. Sometimes, though, not long afterward, surviving loved ones find that the administration of the estate is also extremely challenging. This is particularly true when the estate includes a home that is in foreclosure or that has a mortgage that has gone into default. When this is the case, a Fort Lauderdale foreclosure defense attorney can help.

If you’ve inherited a home and are worried about the foreclosure process, call us at Loan Lawyers today. We can fully explain all the legal options you have available to you, and walk you through whatever process is required. We also review your case at no charge to you, so call us at (954) 523-HELP (4357) or fill out our online form to schedule your free consultation.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.