My dad is the only name on the title. He just died and owes about the same amount as we think the house is worth. So after we fix it up and pay a realator, we would be in the hole. Can we just stop paying on the mortgage and let the house go into foreclosure and let the property go back to the bank? Of can the bank come after other assets in the estate if there is a loss between what is owed and what they are able to sell the house for?
A large majority of homes that go into foreclosure in Minnesota go through a process called "foreclosure by advertisement" ... this means that the lender chooses to post an advertisement of the foreclosure sale in a newspaper (usually one of the legal newsletters for the county) for six consecutive weeks and then has the sale (which is held at the sheriff's office). When the lender chooses to go this route they are foregoing the opportunity to go after a deficiency ... if they wanted the opportunity to go after a deficiency then they would have to chose "judicial foreclosure" and start a law suit to foreclosure ... this can be very costly and time consuming and that's why most lenders will chose the "foreclosure by advertisement" route. I would say that there shouldn't be a problem if you just stop paying on the mortgage. If you go the deed-in-lieu route then make sure that the lender agrees not to go after a deficiency.
Errin P. Stowell, Esq.
Stowell Law Firm, LLC
St. Paul, MN
Creditors can generally make claims against the estate for all debts. Whether or not a secured creditor would pursue an estate for any deficiency or not probably depends on the amount in question. Under your summary, I tend to doubt this would happen. It sounds as if they would repossess the house and that would be it.
If there are substantial other assets in question, it would be a good idea to check with an attorney to determine if there are other things you could do, (such as a deed in lieu of foreclosure), that might entice the lender to walk away with the property and forgo any other possible remedies.
Best of luck to you!
Yes you can stop paying on the mortgage and let it go into foreclosure; or as the prior attorney stated the bank may simply take back the deed in lieu of foreclosure.
As for the bank coming after other assets, if your father signed a promissory note in addition to the mortgage, the bank could assert its rights under the note. This may allow them to attach other assets. But you need to discuss this matter with MN estate counsel and present him all of your documentation and an inventory of estate assets to get a solid answer.
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