What Happens to a Mortgage When the Borrower Dies?
When a homeowner dies, the lender can foreclosure, but the foreclosure must name the heirs, executors and administrators. If the lender has not named the heirs, executors and administrators, they cannot proceed with a sheriff sale.
When a homeowner or mortgage borrower dies, their Will normally dictates who will be in charge of their property, such as an heir, executor, or administrator. If the homeowner dies without a Will, this responsibility will pass to a close family member or other party according to the New Jersey laws of intestacy. This person will then have to decide what they want to do with the property, such as selling it, continuing to pay the existing mortgage, or seeking a loan modification.
Is a Lender Allowed to Foreclose Once the Homeowner Dies?
If the property is in foreclosure when the original borrower dies, the mortgage lender will sometimes continue with the foreclosure process without informing their heir(s), which could possibly result in the home being sold in a Sheriff Sale. Unfortunately, this is a common situation where heirs find out about the foreclosure too late and are left scrambling to get ahead of the situation.
When a homeowner dies, the mortgage lender is required by law to change the foreclosure litigation to include any heirs, executors and administrators that take control of the property. If the lender has not changed the foreclosure litigation, they cannot proceed with a sheriff sale.
My Family Member Died, and the Bank is Scheduling a Sheriff Sale of their Property. What Should I Do?
If you are the heir or executor of a property that is in foreclosure, and the bank is moving ahead with foreclosure or a sheriff sale without naming you and giving you notice of the foreclosure, contact Ira J. Metrick today. We can file a motion that will temporarily halt the foreclosure process, and help you assess your options for how to avoid the foreclosure.