Successor in interest:
Your dad left you his house in his will but he also left you his mortgage. What can you do??
Losing a loved one is always difficult emotionally and it can be overwhelming to try to sort out all the practical things that were left behind too. You have to handle funeral arrangements, find insurance proceeds, pay leftover or ongoing bills, distribute or donate personal effects, etc.. So many of these things can take time and before you know it several months have passed. It’s often around this time that clients will call because they were surprised to have received a bill or even a default letter from a bank, mortgage company, or title loan lender. Sometimes they are surprised to learn the loan is in default and the property is subject to repossession or foreclosure
If you inherited a home that is subject to a mortgage it’s possible that the bank won’t talk to you because you aren’t “on the loan.” It doesn’t seem to make sense that a bank would refuse to talk to you when you just want to know how much to pay, when to make the payments, how much is left to pay. It’s amazing how many people I have spoken to over the years who just want to make payments but can’t because the bank won’t give them any information. Banks and collection firms will tell you that it’s because discussing someone else’s credit would violate the Fair Debt Collection Practices Act and other related consumer protection based laws. However, there are federal rules that were put in place by the Consumer Financial Protection Bureau (the “CFPB”) that are meant to help ‘successors in interest.’
Mortgage servicers now have to have their own policies and procedures in place for communicating with “family members, heirs, or other parties, known as “successors in interest,” who have a legal interest in the home.”
You can send a servicer a “Request for Information” which proves that you are a person who may be a “successor in interest.” Your request should contain the name of the deceased and sufficient information it to identify the loan at issue. The loan servicer has to acknowledge receipt of your request within five days and within thirty days from that it must give you a written list of documents that it requires to proceed with recognizing your identity and interest in the property.
The servicer has to make its document requirements reasonable and the documents required can’t go over the legal requirements for the state where the property is located. We’ve seen cases where someone owned property with another individual as a joint tenant with rights of survivorship. Basically, when our client’s father passed away, he owned the property right away without having to hire a lawyer to probate the house. The mortgage servicer tried to refuse to recognize him until he could show he opened a probate, but we were able to step in and prove that he had a legal interest in the property because of the way Florida law works. The requirement to open a probate was not reasonable so the mortgage servicer began working with the client.
Mortgage servicers are also supposed to provide successors in interest with the same loss mitigation options they would provide the original borrower. If your bank tells you repeatedly that you have to catch up the whole loan before they will work with you because you are not on the loan, please contact us so we can discuss your options going forward.