What happens when i inherit a house with a mortgage still owed on it?
Sacramento, CA |
does the bank require me to pass their credit/income requirements?
can they force me to sell or take the house.
it has a positive cash flow and covers the mortgage right now with a tenant.
does the bank even have to know it has passed to me?
You need to look at the note to see the terms. Passing title to you may trigger the due on transfer provisions in the note. Generally, if the payments are being made and kept current, the bank will not find out or care. That said, I would not rely on that. You should have the note reviewed and make a careful, fully informed decision on how to proceed.
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They don't care who has title as long as they get paid. Just continue to make the payments. They can't take it or force you to sell unless the loan goes into default status.
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Stephen Pearcy is licensed to practice law in California. The response herein is not legal advice and does not create an attorney-client relationship. The response is for legal education and is intended to provide general information about the matter within the question.
The other attorneys are correct from a practical standpoint. If you wanted to, for instance, refi you would have to qualify. The bank may in fact find out if a new deed is recorded referencing a mortgaged property.
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I agree with my colleagues that you should be okay on this. Under Federal law, the bank cannot foreclose or accelerate the debt as long as payments are current, but this can depend on your relationship to the deceased. An attorney would be a good idea.
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If you inherited the house from a parent, there are many lenders who will allow you to assume the loan under the current terms without a credit check, just because you are the child-heir. Not all of them, by any means, but they're out there. I'd be cautious about just letting it go for too long because the mortgage contract with the deceased person likely DOES have a clause saying the loan can be called immediately upon a transfer of the property. Also, if there are any problems or questions later, you won't have the authority to ask questions about the account because you aren't the account holder.