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A close friend of mine committed suicide. His family is trying to decide whether to pay off his house or continue paying the mortgage themselves. My question is, are there any provisions in a mortgage contract to pay off a house in a suicide situation? My friend was not married, and no one else was on the mortgage. Someone told me that PMI would sometimes provide benefits for suicide. But, he didn't have PMI because he put 20% down when he bought the house to avoid having to carry it. Life insurance was not an option because he didn't have any. Any suggestions?

gmakerley · Posted: Mon Oct 06, 2008 11:37 am Post subject:

the mortgage holder has the right to be paid in full upon the death of your friend. however, if the family maintains payments on time, i'm quite sure the company won't be too worked up about it. if the family has been in contact with the mortgage holder, then that information will obviously be readily available to them.

PMI is not in the least related to insurance that a borrower might purchase to pay off a loan. the intent of such insurance is strictly to pay a loan in full if the borrower defaults. death is not default.

my best suggestion would be for the family to discuss this situation with the lender; also to discuss this with legal counsel. you didn't indicate if your friend had a will, or if the estate will be probated. clearly, the disposition of the real estate will be adjudicated in that fashion. if a family member is heir to his estate, that would include the property. negotiating with the lender might be advisable in that situation as well.

an understanding lender is not going to insist on being paid in full "right now." under the circumstances, you ought (or the family ought) to have time to work this out in a reasonable fashion.

Posted: Mon Oct 06, 2008 12:14 pm Post subject:

I agree with george. Best thing to do is contact the mortgage company. If they plan on selling the property, the mortgage company might extend a defferrment period.

I think it is unlikely that they will cut what is owed to them when they could easily sell the property to recoup thier loan.

My condolences to you and your friends family.
Good luck

elnoralittle · Posted: Mon Oct 06, 2008 12:15 pm Post subject:

I agree with george. Best thing to do is contact the mortgage company. If they plan on selling the property, the mortgage company might extend a defferrment period.

I think it is unlikely that they will cut what is owed to them when they could easily sell the property to recoup thier loan.

My condolences to you and your friends family.
Good luck

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Home pay-off following suicide