Q: My wife is the sole heir to her Mom's house, We are planning on moving into it, There is a Mortgage owed.
We are going to pay it off but what rights are there to include her name on the loan so the bank will have to answer her questions and give her details. Her will states that all assets go to her once the estate is settled in October. I understand that the Garn-St. Germain act prevents them from demanding the remaining amount. But Bank says that they won't allow her to assume the loan, We can make payments without issue to them. But they won't be able to tell us anything. I read up on the Dodd/Wall act dealing with the CFRB and I saw something that said they have to add her to the loan or something along that line to allow her to know the details. Am I on the right track to protect her, I know she can be added to the title after but that doesn't have anything to do with the Bank. Please advise and thank you!
A: It is very likely that your mother-in-law's mortgage has an acceleration clause. This makes the entire balance due upon the death of the borrower. A surviving spouse has some rights with respect to assuming the loan. But, I'm not aware of any rights that a child has. In other words, you will probably have 3 options: 1) qualify to get a new loan, 2) pay off the existing loan if you have sufficient assets, or 3) sell the house.
A: I just reviewed a few mortgages and the death of a borrower would not result in the acceleration of the loan under the terms of Ohio-Single Family Fannie/ Freddie Mac UNIFORM INSTRUMENT. Pursuant to 12 CFR 1024.38 a transfer as a result of death by will or operation of law results in a successor in interest. 12 CFR 1024.30 requires a successor in interest to be treated as a borrower. 12 CFR 1024.32 provides the general disclosure requirements that must be provided to a successor in interest.
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