My brother was living with our mom at the time of death. He is considering trying to keep the home, but he wouldn't qualify to refinance the mortgage. I understand we could keep the current mortgage without qualifying/refinancing due to the Garn-St. Germain Depository Institutions Act of 1982 and just keep making payments which he could afford to do. I am assuming though if I wanted to get my name off the mortgage that would trigger a situation where he would have to try and finance himself. The ideal plan would be to have him buyout my half of the current equity (he can afford to with his portion of inheritance) and then make sure I would have no liability for the mortgage.
You are correct that the mortgagee can not force a sale of the property since you and your brother inherited the property from your mother per 12 U.S. Code § 1701j–3.
Regarding your concern about how to transfer your interest in the property to your brother without triggering the due on sale clause, I would suggest the following:
First, consult the mortgage documents. Some older mortgages do not have strong due on sale clauses. If the mortgagee has not specifically reserved the right to declare the mortgage balance due in case of a transfer of a 50% interest, then you should be able to transfer your share to your brother without penalty. If the transfer is prohibited by the due on sale clause, I would contact the lender and explore the possibility of refinancing (if your brother has extra money to put down, the lender may be amenable to this possibility). If all else fails, it may be worth exploring the idea of a contract for deed in which the deed is executed when the current mortgage is paid off (your brother agrees to purchase your share of the property in exchange for making regular payments to you, and upon payment of the balance, the deed is executed).
I highly recommend consulting with a qualified real estate attorney in your area before taking any action that could impact your family's obligations under the mortgage.
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