Colorado Springs, CO asked in Consumer Law, Estate Planning, Foreclosure and Real Estate Law for Arizona

Q: Law or protection for deceased's home loan assumption by a Joint Tenant owner not not already listed on the mortgage?

Father-in-Law helped his daughter by buying a trailer home for her. The trailer is in Arizona where he also lives (but not in the trailer with her). She has lived in the trailer since 2000 when her Dad purchased it.

Daughter was added to the deed as Joint Tenant (JTWROS) couple years after the purchase but the mortgage is only in Father-in-Law's name. Daughter is listed on the bank account where the mortgage payments are automatically paid from and she deposits money there every month to cover the mortgage.

What rights does daughter have to continue (or assume) the mortgage after her Dad passes away? Can she automatically just continue making payments until it is paid off? Would she need to have the bank change the mortgage to be in her name? Would she have to qualify for the loan (she doesn't think she can qualify)?

Is her being on this deed covered as "inheriting" the home? Have read there are federal laws for loan assumption of "inherited" homes.

1 Lawyer Answer
Nina Whitehurst
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  • Estate Planning Lawyer
  • Crossville, TN
  • Licensed in Arizona

A: You are wise to be thinking about this proactively. The federal law that prohibits lenders from calling the loan due when the borrower dies applies to traditional homes and also "residential manufactured homes", so the answer depends on whether the home is a "residential manufactured home". Because people use terms like "mobile home", "trailer", and "manufactured home" somewhat loosely, it is difficult to say whether this law will provide protection from the loan being called due when Father-in-Law passes.

The safest thing for Daughter to do now would be to contact the lender and ask if they will release Father-in-Law from liability on the loan and allow Daughter to assume the loan in his place. If they agree and the paperwork is signed, then when FIL dies there will be no problem. If they do not agree, then Daughter might try to find another lender to refinance the loan into her name. That would provide total peace of mind.

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