Mortgage after passing away

[OrbitalKat]

Jurisdiction

Kentucky

My husband's ex passed away a week ago. She received the house she was living in at the divorce . But because she wasn't working , she didn't /couldn't refinance the mortgage and my husband stayed on the mortgage.

She started to default on it about 3 or 4 years ago, not paying , then paying , then not paying, which ruined my husbands credit . Nothing to do unless he wanted to pay her mortgage, but he wasn't going to get the house if he did.

Now that she sadly passed away, is there anything he should expect ? There is an adult daughter and I assume she will inherit the house . Can anyone come after my husband because he is on the mortgage? Can he be forced to pay anything? Should we expect that he will ask to sign any papers for the daughter to inherit the house ?

Mainly trying to figure out if we need to worry about anything with that mortgage now.

Correction : Should we expect that he will be asked to sign any papers for the daughter to inherit the house ?

 

[army judge]

ow that she sadly passed away, is there anything he should expect ?

Yes, if his name has remained on the mortgage contract, he should expect to be contacted by the lender (or their representative) regarding the debt.

There is an adult daughter and I assume she will inherit the house .

If there is any debt still owed on the home, the heirs will probably not get a dime.

If the home is sold at auction, any remaining monies left after the debt has been satisfied should go to the heirs.

If there is a deficit remaining after the home is sold at auction, your husband might be on the hook for it.

If he qualifies for a chapter seven bankruptcy (you don't have to be a party to that action), he can legally escape the debt.

Can he be forced to pay anything?

No one can be forced, however anyone can be hounded, as in dunned.

Should we expect that he will ask to sign any papers for the daughter to inherit the house ?

Only the passing of time will provide you that answer.

Correction : Should we expect that he will be asked to sign any papers for the daughter to inherit the house ?

Only IF his name remained on "deed".

If it has, then the daughter may not inherit the home.

 

[OrbitalKat]

Thanks a lot ! This is very helpful!

 

[army judge]

Thanks a lot ! This is very helpful!

You're welcome.

 

[zddoodah]

She received the house she was living in at the divorce . But because she wasn't working , she didn't /couldn't refinance the mortgage and my husband stayed on the mortgage.

How is the title held presently? Her name only? Her name and his name? His name only? If it's both, how is the joint title held (e.g., joint tenancy, tenancy in common, tenancy by the entirety, etc.).

She started to default on it about 3 or 4 years ago, not paying , then paying , then not paying, which ruined my husbands credit . Nothing to do unless he wanted to pay her mortgage, but he wasn't going to get the house if he did.

There was action he could have taken at the time, but that's water under the bridge now.

Now that she sadly passed away, is there anything he should expect ?

Ummm...not really sure what you're asking, but her estate will need to be administered in accordance with the terms of her will or the intestate succession law (i.e., the law that says who gets what when someone dies without a will).

Can anyone come after my husband because he is on the mortgage? Can he be forced to pay anything?

These are awfully vague questions, the answer to which couldn't possibly be anything other than yes. Obviously, your husband's ex's death doesn't have any impact on his liability under the mortgage. Your husband should speak with his daughter to determine whether his ex had a will (and, if so, what it says) and what she intends to do with the home and mortgage.

Should we expect that he will ask to sign any papers for the daughter to inherit the house ?

I'm not sure why he might do that.

Should we expect that he will be asked to sign any papers for the daughter to inherit the house ?

I doubt it. However, a lot of things depend on how you answer the questions I asked above.

 

[Tax Counsel]

Mainly trying to figure out if we need to worry about anything with that mortgage now.

Kentucky is a state that allows for deficiency judgments. That means if the lender doesn't get paid and it forecloses on the home the lender can go after the mortgage debtors if the sale doesn't pay all of the mortgage debt. So if the home is in Kentucky it may well be that the lender will come looking to your husband to pay the mortgage at some point. If the home is in another state the answer might be different.

The two best ways to solve this problem is to sell the home at a regular sale (which would get a higher sales price than a foreclosure sale) and pay off the loan or to have the daughter (or whomever inherits it) refinance the loan in their name only, removing your husband from responsibility. For either of those to really work, though, the house needs to be worth more than what is currently owed on it.

If the house value is less than the loan amount, perhaps a short sale can still be done in which the lender agrees to forgive the rest of the balance owed on the home after it gets all the sale proceeds. The advantage to the lender is that the short sale will get more money for the lender than a foreclosure sale. But lender gives up being able to pursue the deficiency judgment in that case. Thus, the lender is not likely to agree to that if your husband as a lot of assets from which he could pay the deficiency if the lender foreclosed. Note that one potential drawback to this is that the amount of the debt forgiven might become taxable income to your husband. The rules for determining how much, if any, would be taxable income are bit complex so I won't get into that here.

Should we expect that he will be asked to sign any papers for the daughter to inherit the house ?

Since he no longer has an ownership interest in the home there really isn't any need to have him sign anything for the house to transfer to whomever inherits it.

 

[zddoodah]

Since he no longer has an ownership interest in the home there really isn't any need to have him sign anything for the house to transfer to whomever inherits it.

Except that the original post does not foreclose the possibility that the OP's husband might still be on title. If he's still on title, he'd definitely have to sign off on a sale or other transfer.

 

[Tax Counsel]

Except that the original post does not foreclose the possibility that the OP's husband might still be on title. If he's still on title, he'd definitely have to sign off on a sale or other transfer.

In that case of course the buyer would insist on that to get clear title.