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Can the bank legally keep a deceased person on loan contract?

My father took out a mortgage on home. He since passed away. My mother is on the loan as well. She is permanatley disabled, losing her home. The question is can she fight for a loan mod due to husband passing away? Is there any wrong doing on behalf of bank? They also sold our loan multiple times to other banks. Please advise.

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5 Responses to “Can the bank legally keep a deceased person on loan contract?”

  1. Sarah said :

    Yes – the contract does not end when someone dies. The debt gets passed to whomever he left his possessions to in his will.

  2. My Take on It said :

    When your father died, I would imagine that your mother inherited the house and the mortgage that went with it
    If she cannot pay the mortgage, they will foreclose

  3. Realtyyoudefine said :

    In answer to the last statement, it is usual practice for lenders to resell the loan to other institutions, so that is irrelevant.
    And there is no wrong doing on the part of the bank: both your mother and father made the legal commitment to pay the mortgage loan.

    You say your mother is losing her home. Does that mean she cannot pay the mortgage and/or is behind on payments?
    Your mother should notify the lender that one of the co borrowers is deceased. (They will need a copy of the death certificate.)

    Did your father not leave a will? If so your mother should have been named as a beneficiary.
    If no will, the estate will go into probate and the court will determine how the estate is settled.
    Nevertheless, to settle the estate, any assets will have to be sold to settle outstanding debts.
    If your mother cannot afford the mortgage and cannot qualify to refinance on her own, her best bet is to sell the house in order to pay off the mortgage balance.
    If there is any equity in the home, she would keep that, unless there are other liens on the house. In that case the proceeds will be used to pay of those creditors.

  4. Mr Placid said :

    A mortgage is an encumbrance on the property, not on your mom. If the mortgage is not paid, then the bank will foreclose & sell the property. So, the name on the mortgage is pretty much irrelevant. The bank loaned the money with the expectation that $XX amount of dollars would be repaid every month. The deal did not include any clause whereby the death of some responsible party would result in a lower monthly payment. Someone, whether it be you, your mom, your neighbor, or Santa Claus, must make the mortgage payments to avoid foreclosure.

    There is nothing that prevents your mom from seeking a loan modification, or a refinance. But, there is also nothing that requires the lender to provide a loan modification or refinance. So, if mom cannot make the payments, then the options are (1) let the bank foreclose; (2) seek a modification with the bank, or (3) sell the place & move into more affordable accommodations.

  5. Landlord said :

    Your fathers estate is responsible for the debt. She can not ask for it to be forgiven because of his passing. She either keeps the house and the debt or sells the house.


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