A few areas which you need to clarify when you consult with an attorney. Has title been transferred to your name from the trust or is it still under his trust name?
Also investigate whether this was a countrywide loan subject to class settlement or not?
Regarding the answer to forgiveness, NO it will not be forgiven but n so far as any possible claims against BOA the successor in interest to Countrywide , you need to consult with an attorney to see whether your grandfather's claim "survives" and in fact you as the heir can "step in his shoes" and present the claim if you have any.
I am not sure what you mean by "upside down at 420,000.00" sounds like it was a negative amortization loan which added to the principal in which case do fully investigate the class action settlement which in fact BOA had regarding countrywide's "pick a pay" loans. I assume when you say upside down, the house is worth less than the loan balance.
As mentioned in previous answers , some other options could be available to you depending on the house value.
It is strongly suggested that you seek advise of experience lawyer in this case because there are a number of issues involved and potentially you could have claim against BOA.
Best of luck,
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No, the loan would not be forgiven.
I assume you are now the sole owner, but you don't indicate anything about your financial situation nor the current market value of the property.
Some options which you can discuss with an attorney in more detail include short sale, deed in lieu of foreclosure, foreclosure and refinancing.
The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author (who is only admitted to practice law in the State of California). For specific advice about your particular situation, consult your own attorney.