The mortgage does not end, but you can usually keep the home and the loan. Federal law generally stops the lender from calling the loan due just because a relative died and the home passed to family.
A law called the Garn St Germain Act stops lenders from using a due on sale clause for some transfers. That includes a home that passes to a relative after a death.
A person who inherits the home is called a successor in interest. The CFPB says a successor is not personally on the hook for the debt but can choose to take it over.
In 2014, the CFPB said an heir can be added to the mortgage without a new ability to repay review. That makes it easier to get account details, pay off the loan, or ask for a loan change.
Mortgage servicers must have steps to find and talk with surviving family. In 2016, the CFPB widened protections for people who get a home after a relative or joint owner dies.
Keep paying to avoid foreclosure. A CFPB report found some servicers push survivors to refinance at higher rates, even when the rules let them keep the current loan.
- Keep making the monthly payment
- Tell the servicer about the death
- Ask to be confirmed as a successor in interest
- Ask about taking over the loan or a loan change if you need help
- File a complaint with the CFPB if you get the runaround
More questions
Do I have to refinance?
Not always. The CFPB says federal guidelines can let survivors keep the existing loan terms.
Where can I complain?
Go to the CFPB website or call (855) 411 2372.
Words to know
- Owner
- The person who owns the policy. They can use the policy values and make changes while the insured is alive.
