co-borrowers and one dies

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Icon Mini Profile 3wheeler





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Post Posted: Sat Apr 25, 2009 5:17 am    Post subject: co-borrowers and one dies
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What happens when there are co-borrowers on a loan (husband and wife) and one dies. The Deed is listed as Tenants of Entirety and they were both listed on the loan.

Can the mortgage company go after payment from the deceased's estate, or does the loan become the responsibility of the surviving spouse, who was also a co-borrower and who is now listed as sole owner on the deed.

For example, can the mortgage be listed as debt when figuring out debt to be paid by the Estate of the deceased, or does the surviving spouse have to default on payment for that to happen?

Any help would be greatly appreciated.
Icon Mini Profile gmakerley
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Post Posted: Sat Apr 25, 2009 5:26 am    Post subject:
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the surviving spouse simply continues making payments. for the estate to pay off the mortgage, the home would likely have to be sold; right? that's certainly not in the best interests of the survivor.
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Icon Mini Profile 3wheeler





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Post Posted: Sat Apr 25, 2009 5:38 am    Post subject:
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Here's the situation.

Deed is in both names, but listed as Tenants of the Entirety. Which means it automatically transfers to the surviving spouse upon death.

The mortgage was listed in both spouses names as co-borrowers.

There is more than one property. The spouse is planning on putting the mortgages down as debt on the deceased's estate, which will deplete it and there will be nothing left for the heirs. Can that be done, or is the surviving spouse liable. Would the mortgage company make a claim on a deceased estate when the co-borrower is still alive.

I thought a mortgage can only be listed as debt on an estate when the deceased owned it alone and didn't have a co-borrower? I have gotten conflicting reports and so am confused.
Icon Mini Profile gmakerley
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Post Posted: Sat Apr 25, 2009 5:41 am    Post subject:
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i don't know estate law nor probate law - you need an attorney who does know these things to answer your questions.

a mortgage company would have no reason to make a claim upon the death of one of two borrowers. the mortgage company wouldn't know of the death unless told, anyway.

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Post Posted: Sat Apr 25, 2009 5:45 am    Post subject:
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Thanks for answering. I guess not from a legal question, but from a mortgage perspective. If the co-borrower that died was the income earner, and the spouse was a stay-at-home spouse. The property transfers to their name and they are listed as co-borrower. What does a mortgage company do when notified of the death? Do they make a claim against the deceased's estate, or do they give the co-borrower, surviving spouse the chance to continue the mortgage or sell the property?

The spouse has every intent on trying to get the debt paid through the estate and the lawyers are saying the mortgage is automatically part of the debt of the estate. Then there are other attorneys that are saying it isn't. I'm trying to figure out what the mortgage company does? Any help is greatly appreciated.
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Post Posted: Sat Apr 25, 2009 5:47 am    Post subject:
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the mortgage company is only going to sit back and collect payments. there is no reason for them to be involved in anything unless and until payments are not made. at that time, they'll be concerned and engaged.
why are all these attorneys in disagreement?

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Post Posted: Sat Apr 25, 2009 5:56 am    Post subject:
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I have no idea. We reside in FL and our attorney and others have never heard of the mortgage of a spouse passing through the estate. The husband and wife resided in PA. It is their attorney and the one we hired in PA that said it can go through the estate, but our attorney in FL and others are confused by that. Would it only go through the estate if the spouse defaults? The spouse obviously cannot keep up the payments, as there are 4 properties and the deceased was the bread winner, but isn't the option for them to put them up for sale. Would the mortgage company suggest that route, or would they expect it to be listed as debt on the deceased's estate? It seems like it is up to the spouse? The spouse is wanting to deplete the assets from the estate to create equity in their properties before selling and we are told there is nothing we can do about that. I am very confused.
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Post Posted: Sat Apr 25, 2009 6:18 am    Post subject:
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i'm not much help, frankly, as estate law is for lawyers. as for the mortgage company, all they want is for the loan to get paid. they don't care who does it, or how. i doubt they'd have any suggestions either way as to selling or including in an estate, etc.
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Post Posted: Sun Apr 26, 2009 5:21 pm    Post subject:
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3wheeler,

Make sure you have the right type of lawyer handling this. George pointed out that you should be using an estate attorney. If you are not using an attorney who is familiar with estate law, then you may be taking a huge gamble. It would be like going to Home Depot and asking an electrical question of someone who works in the garden center.

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Post Posted: Sun Apr 26, 2009 6:20 pm    Post subject:
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Thanks. We did talk to an estate lawyer and they were confused. Most properties pass outside the estate, but after digging, they found that mortgages are part of the debt and it can go through the estate. I guess most people don't usually put the mortgage through the estate. I was just wondering from a mortgage company perspective, how they handle it.
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Post Posted: Mon Apr 27, 2009 7:04 am    Post subject:
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Hi

I think if there's a surviving co-borrower the lender generally holds him/her responsible for the loan after the death of the other co-borrower. But if the surviing co-borrwer cannot afford to pay the loan, it is included in the estate as a debt and is paid off by selling the estate.
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