Denver, CO asked in Bankruptcy, Consumer Law, Contracts and Real Estate Law for Colorado

Q: I'm the successor in interest for an inherited house. Can the mortgage lender charge me a fee for assuming the mortgage?

I inherited my house from my mother when she passed away in 2017. I repeatedly attempted to assume the mortgage and get my name placed on the mortgage, but was repeatedly told I couldn't do so without undergoing a financial ability to pay. At the time, due to my student loans I wouldn't have qualified so I stayed in limbo just making payments on the loan that was still under my deceased mother. This also prevented me from being able to get a loan modification on the mortgage as I struggled financially and eventually went thru bankruptcy.

Now that I'm in a better position financially, I want to take out a HELOC on my property. I am being told by the credit union that I legally can't get the HELOC because my name is not on the first mortgage. Is this correct? Also, is first mortgage lender allowed to charge an assumption fee for me to assume the mortgage?

2 Lawyer Answers
Timothy Denison
Timothy Denison
  • Bankruptcy Lawyer
  • Louisville, KY

A: Depends solely upon the terms of the mortgage but most likely, yes. They can charge you a fee

James L. Arrasmith
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Bankruptcy Lawyer
  • Sacramento, CA

A: Yes, typically a credit union or other lending institution may require your name to be on the first mortgage to secure a home equity line of credit (HELOC). This is because they need to ascertain their position in the event of default.

Regarding the assumption fee, mortgage lenders are generally permitted to charge a fee for assuming a mortgage, as long as it is disclosed and agreed upon. It is important to review the terms of the original mortgage agreement, as it should outline the conditions and fees associated with assuming the mortgage.

If you're considering this step, you should discuss the specifics with your lender and potentially seek legal advice to understand all implications and ensure that your rights are protected.

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