Dad passed, Mom paying a mortgage that is not hers!!

I'm not an attorney, but I think it's common knowledge that the home should have passed to your mom by right of inheritance, unless the home was willed to somebody else. It is necessary to transfer the title, and I think she should retain a real estate attorney to do that. If she has substantal liquid reserves from life insurance proceeds or retirement funds, and income from pension or social security, she might be able to qualify with the current low rates by paying down the principal. With an FHA loan she will need a 640 middle credit score now (new lender requirements starting Monday, November 16, not an FHA requirement). If she can't refinance due to inadequate qualifications, she might be able to do a reverse mortgage and that would eliminate mortgage payments. What is the mortgage balance, interest rate, and type of mortgage on the property? What is the approximate market value of the home?

Dan Stephens
Mortgage Banker

We did get the title trasfer but the mortage company has not changed the mortgage to my mother name. The mortgage is still in my fathers name eventhough he is deceased and my mother has been paying the mortgage. She used her insurance money to pay the mortgage. She has only been in the house 5 years and is not employeed. She suffered a breakdown after my father died and has not worked since. I find out that the mortgage is not being reflected on her credit report so her score is @ 650-675 (fair). I don't think she has enough equity in the house to do a reverse mortgage. The principal is 96,000.00 at 9.5% intrest, 30 year-fixed, market value is 150,000.00$. I don't understand how the mortgage company can continue to collect a mortage from a dead person and not transfer the mortgage to my mother. What are our options?

Given the low loan-to-value and the reasonably good credit score she proabably would qualify for a loan, if she has any qualifying income, such as social security survivor or retirement benefits, permanent disability benefit, or priate pension from your father, or investment income including interest or dividends from retirement funds. The mortgage company might be stuck, if she doesn't qualify under their guidelines, but there are other types of loans out there. From the interest rate it looks like a subprime loan, and those types of lenders are all out of the origination business due to the mortgage crisis, even if they are still servicing loans. She might be dealing with a loan servicer who doesn't originate loans at all. The loan could be tied up in a "toxic" collateralized mortgage security with other loans, and the investor in that security has no power to change the borrower on the loan or do a refi. Actually, there may be a "due on death" clause in the loan note, and your mother is lucky the servicer hasn't started foreclosure proceedings (or have they?).
Dan Stephens
Mortgage Banker
Home Savings of America, FSB
(FDIC No. 29178)

[Contact details and promotional text deleted as per forum rules. Thanks.]

a reverse mortgage would make sense to me, because there seems to be sufficient equity to do it, assuming she's not looking to take out a mountain of money.

dan, please don't solicit - i know your intentions (i think), and i don't believe you're trying to do anything underhanded, but the community does not tolerate direct solicitations. you are, of course, welcome to join this community as a lender and be featured in that manner.

She is not old enough for a reverse mortgage and she has only lived in the house for 5.5 years. We were contacted by a company claiming it does hardship loan modification and can lower her payment to 614.00/mo (including taxes and insurance, means the mortage would drop to 440.00) or so. She cannot qualify for refinancing because she her debt-income ratio.
This lawyers office claims to negotiate with the company that owns the mortgage (I forget the name) to accept the hardship loan and lower the payments. He advise my mom to not pay her mortgage this month (which is the first time she will be late) and pay him 500$ and next month another $500. He said the process takes 90 days and they have never lossed.

He said he "ask to company to prove they actually own the mortgage and that they proably wouldn't be able to prove that they own the mortgage, which will give them a chance to negotiate". I have been reading about this scam and I am skeptical. How can I make sure I am not getting scammed? The office is in Florida and we are in Texas.

"we were contacted by a company" - and how did they find out about you?

"it does hardship modification" - they do the modification themselves, or they "work with" the actual lender?

"not pay her mortgage...and pay him $500 and next month another $500..." - yeah, this makes a great deal of sense....NOT

"the process takes 90 days" - what process? the foreclosure that will happen due to non-payment?

"prove they own the mortgage" - huh? and this is good advice, precisely why?

SCAM - ought to be Suckers Can't Avoid Mistakes because that's how they make their money, by sucking people in.

run away as fast as you can. this is nonsense...no it's not...it's nastiness and it's a ripoff.

your last question is the best one: "How can I make sure I am not getting scammed?" here is my answer: have nothing to do with these morons and you will not get scammed.

Welcome back Kay,

In one of your earlier posts, you've mentioned that the property has been transferred in your mother's name but the mortgage docs still reflect your deceased father's name. I guess your mother was unable to refinance the loan due to credit problems. In that case, she is not liable for the mortgage payments. If she stops the mortgage payments, the lender will only be able to foreclose the property. He won't be able to come after her for the deficient amount. Her credit will also not get affected due to the foreclosure as her name is not on the mortgage docs.

If your mother wants to negotiate with the lender, she can do so but it would be better if she negotiates herself rather than taking the help of an attorney.

I thought the whole issue sounded funny. I am negotiating with the mortgage company myself. The mortgage company said the process will take three month for them to make a decision. I told my mom to put the house on the market while we go through the modification. It taking a few months to sell houses here so we will see what happen. Or should we not put the house on the market?

Dont list the home for sale. Most mortgage products are not available if the home has been listed for sale in the past 6 months. The logic behind it is that the loan will not have time to perform if you take out a new loan and then sell the home right away. Plus you'll typically be wasting money on the closing costs if you sell it right away.

Consider what your true goal is. If it's to sell it, just sell it. If it's to improve the terms of the loan, make sure the numbers pencil and make sense.

Using my quick and dirty refinance calculator, I estimate it will take 10 months to recover your closing costs if you refinanced from 9.5% to 5%.

Dont list it. Most mortgage products will not be allowed if a home has been listed within the last 6 months.

What is your true goal? If its to get it sold, sell it. If its to keep it, then make sure that a refinance makes financial sense when you take into account the closing costs and the new rate. Any good mortgage consultant will be able to help you calculate a break even on the refinance. My estimate based on my market is about 10 months for a refinance from 9.5% to 5% given the information youve provide so far.

Sorry for the double post, new here and posted first as a guest.

understandable howard...we veterans get confused all too often.

i like your logic, too - and the advice to our poster to consider what the ultimate goal really is.

How is it that the loan could continue to be in the fathers name when the bank has been notified that he's now dead? I don't get that. Sorry, but surely the mortgage should have been transfered to her at the time?

that's not a possibility, rise. the only way mom gets a loan in her name is to actually get a new loan. inasmuch as dad was the only borrower on that loan, there can be no changes. after all, he's the only one who ever signed a promissory note.

We want to keep the house but she can't afford the payments she is making now. My mortgage company is playing games with the package for loan modification. It was suppose to have been here a long time ago. We called HUD and they can't help because the loan is not in her name. So, we are really stuck. I think we should just walk away and let them forclose. It will hurt them more than it hurts us.