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Tuesday, August 25, 2015

WHAT HAPPENS WHEN YOU DIE AND LEAVE A MORTGAGE?


I've been dealing with a mortgage servicer who is determined to get as much money out of me in fees as is possible.  The main issue recently has been the servicer taking money out of a suspense account -- too which I had been depositing payments in order to accumulate enough to make up for a missed payment two and a half years ago -- and using that money to pay late fees.  In December of 2012, I missed a payment, but have been making subsequent payments on time.  The problem is I haven't had sufficient income to accumulate enough money for that missed payment ($2,000) until recently.  Last week I sent the servicer over $400 and that should bring me current.  No acknowledgement as of yet. 
I now owe $3,000 in late fees that have accumulated over two and a half  years.  I would like to pay $500.00  once or twice a year toward principal, but the servicer won't allow this until the late fees are paid.  They are so mean.  And greedy.  And our  laws don't protect consumer very much, do they?  My mortgage payment is $1,987, with $1,650 going toward interest; the remainder toward principal ($350).  This is the best I can do until I get work.  I keep trying.

This experience with my servicer has caused me to consider how they will handle my mortgage once I pass on (hopefully not for a while).  They could foreclose on my house.  However, I'm making arrangements to leave my house to a relative (maybe two) with an approximately $300,000 mortgage owed by my expected time of death (maybe 15 years from now).  My two young relatives are willing and able to each assume half that amount between them to have such a nice house to own -- when the day comes.  It will also be a great place for them to retire to.  Or they could rent it out until they are ready to move into it.   All is up in the air.

Upon My Death:

My concern (anxiety) is how the servicer will handle this once they are informed I have died.  My anxiety will not be allayed until this issue is resolved.  The anxiety will probably continue long after  my soul leaves my body (if that is possible).  There has been so much anxiety for so long it will probably stick around for a long time.  Although most can't predict with much accuracy when they will die, it would be prudent to make arrangements for how you want your affairs handled well in advance of your death.

I plan to do some research and hopefully get some clarification on this issue from my servicer - and will share in my next posting.  Meanwhile, every homeowner should seriously consider this issue - especially if you are over 65 or 70 -- and make plans accordingly.  According to the Census Bureau, thirty-one percent of people 65 and older have home mortgages.  [New York Times, 2011]



Tony Guerra (Demand Media) states:  "Mortgaged property inheritors generally need to make arrangements with the lenders to pay off those mortgages. Lastly, mortgaged properties can come with property taxes owed, liens attached and even estate taxes due."  While I expect to be current on my property taxes, and so forth, not everyone will be, and they need to discuss this issue with the inheritors.  Or the inheritors  need to take the initiative and discuss it with their parents or aunt or uncle or whichever relative is making this generous bequeathal.

My understanding is that it must be a relative who inherits real property.  (I personally think the law should be changed to add non-relatives; however, having to always battle someone to maintain the modicum amount of security I do have, I don't  have time to lobby for changes in laws at this point in my life.)

 Also from Tony Guerra:  "Relatives inheriting mortgaged homes only are allowed by the Garn-St. Germain Depository Institutions Act of 1982* to assume the existing mortgages. A relative assuming a mortgage on an inherited home must live in the home and also make all required payments, however.  Relatives inheriting mortgaged homes and intending to assume their mortgages can also keep those mortgages in their deceased relative's name. Processes for relatives taking title and recording an inherited property's deed are generally the same as for non-relatives."

I'm not sure why anyone would want to keep a home in their deceased relative's name.  Maybe there's some tax or other advantage.  Will have to do more research.






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*  I had never heard of this law until I googled "inheriting property" a couple of days ago.  I remember Rep. St. Germain from the time I worked in Washington, D.C. and on Capitol Hill (and used to frequent the Prime Rib Restaurant on K Street, also frequented by St. Germain and other legislators, lobbyists, etc.).  If I knew then what I know now, I of course would have paid more attention and maybe even have tried to influence the congressman to make certain changes in the bill.  I have a "causist" inclination, but any extra time I had was devoted to another cause - that of tenants rights.  I was part of the picketing of the Promenade Tenants Association in Bethesda, Maryland, that took place over a two-year period (1982 to 1984) when the building was converted to a cooperative - destroying a really great community of middle and upper-middle class tenants.  (I usually lived in the maid's quarters -- small efficiency units!)