Q: Lender is considering foreclosure however no payments have been made in almost 5 years. Owner recently passed away and the beneficiaries want to keep house but the amount owed on the home equity line of credit would put the house too far under water. (Pittsburgh, PA)
A: I am not sure of the significance of “contract under seal” here. I would have to see the mortgage papers or look at the on-line docket. This sounds like an estate issue to me. If the home is in the name of the decedent, this is an estate debt and no one else’s debt. If the mortgage balance exceeds the market value of the home, the heirs must decide how bad they want to keep the home. If there is enough liquid cash in the estate, the heirs may be able to pay the lien off or interest the bank in refinancing. If not, this may be an insolvent estate and therefore let the bank foreclose. You may be able to negotiate a deed in lieu of foreclosure with the bank and avoid a messy foreclosure and more fees and charges. You need to be asking these questions to the estate attorney. If you do not have one, you need to get one.
Q: Father passed away 2/22/17 (predeceased by our mother who died in 2002). The only assets would be a 2012 Jeep Patriot with $5,000 still owed, and a home with an $18,000 mortgage balance in a depressed area. There was a $7,000 life insurance policy which went entirely to pay for funeral, with three children also paying about $1,000 each towards funeral. Basically, we already know there are more debts than assets, and are hoping to avoid having to pay estate fees, etc., but we are not sure if an attorney is necessary or what we are required to do. (McKeesport, PA)
A: You would need to open an estate if you want to transact his property-sell his house and transfer any other asset in his name. The question you are facing is, is it worth the time and expense to do this, given the fact that it looks at this point to be an insolvent estate? I would need to know more of the details to properly advise you. However, I have advised clients over the years to walk away from situations like this. The home will just go to Sheriff’s sale. There is a chance that the taxing bodies-school and borough especially, could sue for a deficiency judgment in the tax sale. Although it is rare, I have seen that happen. I would gather all your information-statements, bills, the deed, the mortgage documents and consult with a local attorney.