I recommend that you continue making payments on the house and in the meantime, speak with a probate attorney about this matter right away. If your mother died intestate (without a will), you may have rights that you are unaware of as an heir to her estate.
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Make an appointment with a probate attorney immediately to discuss your best course of action.
The State is not going to take the house. The house will be lost to foreclosure, however, if the payments are not made and the lien against it is not cleared.
It is not possible to advise you as to what you should do -- among other things, we do not know if there is equity in the house. You can figure out what to do only by meeting with a qualified probate attorney and discussing all the facts regarding your mother's assets and liabilities.
I would consult with a probate attorney before deciding how to proceed. You have not provided any facts which would suggest that the State would have any claim on the house. The mortgage lender clearly would, however, and it could foreclose, if the payments are not continued. Whether or not it makes sense to continue paying or to walk away depends on the equity in the property, if any.
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Before consulting a lawyer you can do some homework yourself to make your ultimate legal consultation more productive:
1) Do you have access to your mother's prior mail or current mail so you can get a mortgage company statement and see what is owed on the house?
2) Figure out the sale value of the house either my consulting a realtor, or getting a quick estimate by going to zillow.com
3) Try to estimate what bills will be claimed against the estate. You can get a rough idea by knowing the circumstances of your mother's medical care: Did MediCal or a state Medicaid program pay a lot? If they paid they will probably have a lien. Or, did your mother have Medicare or other good insurance that paid almost all the medical bills. Medicare will not claim against the estate.
4) If your mother died umarried and her parents predeceased her, how many other children did she have? If there are other children will all of them cooperate to make probate easy?
Once you have these answers it will be relatively easy for an licensed lawyer in the state where your mother's home is located to give you competent advice as to whether it is worthwhile to start a probate and what that lawyer would charge to do the probate.
If a parent dies without a will, and doesn't have a surviving spouse, his or her children are entitled to inherit the parent's assets. The assets don't go to the state because there is no will. You would have to file a Petition for Probate, however. If the real property has equity, or if you want to keep it despite it not having any equity, you will have to keep making the mortgage payments.
I suggest that you consult with an attorney experienced in probate matters in order to assess your options.
Disclaimer: I hope you found this information helpful. If you did, please indicate so with a thumbs up. However, this answer is provided for general informational purposes only. This answer does not constitute legal advice and should not be relied on. Legal advice can only be provided after consultation with a licensed attorney in your state with experience in the area in which your concern lies. This is so because each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and/or documents at issue. This communication does not create an attorney-client relationship.