Q: Can the lender take ownership of the home if no one officially takes over the loan officially?
My grandmother had refinanced her home prior to her death. She left 6 children behind and my aunt has been making the payments for a month that she's been deceased. She wants to continue to make the payments to the lender but want to know if later this will be of no use if an heir doesn't take ownership of the loan? Can the lender take ownership of the home if my aunt or no one officially takes over the loan even if it's not in default?
A: Federal law prohibits a lender from foreclosing for six months after the court appoints an executor or administrator. After that, the lender can foreclose. Whether the lender will allow someone to "take over" the loan is really a question of whether that person qualifies for a new loan replacing the current one and, in this case, sufficiently large to allow them to buy out the interests of the other heirs (or other people also willed the home). The loan was made based on your grandmother's credit, not your aunt's.
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A: As long as someone keeps making the payments, the lender cannot foreclose.
A: The lender can only take ownership of the home by foreclosing, if there are no higher bidders.
As long as the loan is being paid, the lender doesn't have the right to foreclose (unless some other condition of the loan is violated - you sometimes see this with violation of the due on sale clause of the deed of trust).
If your aunt wants the property, she should make arrangements with the heirs to buy the property (she can't buy the loan, because they don't own the loan, the lender does). It's likely that there needs to be a probate of grandmother's estate. Talk to a probate lawyer.
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