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What happens to a mortgage after death?

If you’ve been named as the executor of family member or friend’s will in Fort Myers, you may be hoping the whole matter remains as simple as reading the will and handing out the assets. Yet what if debt issues arise, such as a foreclosure on the deceased’s home? What are you, as executor, to do?

If your friend or family member put mechanisms in place for his or her estate (including the home) to avoid probate, then the transition of ownership of the home is often a lot smoother. However, that’s not always the case. In fact, the website for the Florida Courts shows that 194 cases went to probate court in Lee County alone in 2014. If a mortgaged home is forced to go through probate, the debt against it must be resolved before any assets of the estate are dispersed to heirs.

Mortgage payments must continue to be made through the estate even after your family member or friend dies. If not, the bank may choose to foreclose on the property. If the mortgage account was a purchase money mortgage, the bank must accept whatever funds come from the sale of the property as repayment. However, if it is not, the other assets in the state may be used to satisfy the difference. This could quickly deplete a majority of the assets in the estate, leaving little to nothing for the beneficiaries.

As executor, you can attempt to work with the bank in order to avoid foreclosure. One way you might want to try is to work out a short sale of the home. Another may be to work with bank to accept a deed in lieu of foreclosure deal. With this, you simply agree to transfer the title of the property to them. 

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