Sadly, it may be too late for you to do anything. 1998 was 13 years ago. Normally, when loans are not paid, the lender has only 4 years to file a lawsuit to compel payment of the debt. But, if your son will cooperate, perhaps he will deed the house back to you, and you can then evict the ex-wife and can re-sell the property to someone else and recoup your losses.
I am licensed only in Texas. Offering information of a general nature in response to a question is not intended to be legal advice in your state.
You really need a good attorney to assist you in evaluating your situation and prospects for recovery of your money. If the house is your son's separate property, and she has no claim to it under the divorce decree, you son can ask that she move out. If she refuses, your son can file a forcible detainer in justice of the peace court.
You can review the forcible detainer provisions of the Texas Property Code sections 24.001, et seq., at the following web address:
Your son may be willing to deed the house back to you since he is probably motivated to avoid confrontation. You can of course in your will indicate that your son has already been advanced the value of the home and loan, and that money should be subtracted or otherwise accounted for in the division of your probate estate.
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