Jesus H Key-rist... I have never seen a thread butchered so badly as this one. The problem may be long solved, but if not, here is what the orig poster was looking for. The ONLY accurate piece of advice given was from djs with this statement:
"Never trust an insurance guy to answer a mortgage question. Never trust a mortgage guy to answer an insurance question...."
BUT, here is the REAL answer. There is NO need to refinance the property; NONE. The estate can be closed without paying off the mtg, not a problem. There is a law that was passed in 1982 by Congress and signed into law called: "GARN-ST GERMAIN DEPOSITORY INSTITUTIONS ACT OF 1982", which addresses the very issue of whether the beneficiaries of the estate, namely children inheriting real estate with a mtg still outstanding can be called by the lender or if the lender must continue to accept payments; (among many other things in that same law, such as can a mtg be assumed, and on and on).
Garn - St Germain states in part, relative to continuing a mtg in this case:
1701j–3. Preemption of due-on-sale prohibitions, (c), (2)
(d) Exemption of specified transfers or dispositions
With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon—
(1) the creation of a lien or other encumbrance subordinate to the lender’s security instrument which does not relate to a transfer of rights of occupancy in the property;
(2) the creation of a purchase money security interest for household appliances;
(3) a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;
(4) the granting of a leasehold interest of three years or less not containing an option to purchase;
(5) a transfer to a relative resulting from the death of a borrower;
(6) a transfer where the spouse or children of the borrower become an owner of the property;
(7) a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property;
(8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or
(9) any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board.
Cornell Law on Garn - St. Germain
What that means in RED above is that when Momma or Daddy dies, the lender is PROHIBITED by this act from calling the mortgage due, or enacting the Due on Sale Clause in the mortgage; (commonly known as para 18 in a std Freddie Mac Mtg), when inherited by a spouse OR their children; (or relative of any sort, really). Could even be a neice, nephew, grandchild, etc.
Also one other piece of decent advice in this thread was the caution about holding title to real estate as Tenants in Common, meaning that the 5 siblings each have their name on the property as a pro-rata share of ownership. If one of the sibs gets into financial trouble, it could taint of cloud the title to the real estate and potentially expose the equity in the property to creditors of the one sibling. So unless all parties of the TIC ownership are above reproach finacnially, it is best to avoid this type of ownership. The property could be held in Trust or in some form of an LLC which would avoid the risks of TIC ownership.
Any questions on the above...? Hopefully that clears up the inacuriousies stated in prior posts. In the words of Leslie Isaiah Gains, (a famed black Cincy Atty who wears a bollar hat, and said in his VERY deep voice): "If you needz me, you callz me".
Ps. One other little tidbit of this Act passed in 1982, it is was dealt with the S&L crisis, as well as increasing the FDIC insurance limits from 40K to 100K on deposits of FDIC insured institutions. Now that has been increased in 2008 to 250K per inst of deposits.
"Never trust an insurance guy to answer a mortgage question. Never trust a mortgage guy to answer an insurance question...."
BUT, here is the REAL answer. There is NO need to refinance the property; NONE. The estate can be closed without paying off the mtg, not a problem. There is a law that was passed in 1982 by Congress and signed into law called: "GARN-ST GERMAIN DEPOSITORY INSTITUTIONS ACT OF 1982", which addresses the very issue of whether the beneficiaries of the estate, namely children inheriting real estate with a mtg still outstanding can be called by the lender or if the lender must continue to accept payments; (among many other things in that same law, such as can a mtg be assumed, and on and on).
Garn - St Germain states in part, relative to continuing a mtg in this case:
1701j–3. Preemption of due-on-sale prohibitions, (c), (2)
(d) Exemption of specified transfers or dispositions
With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon—
(1) the creation of a lien or other encumbrance subordinate to the lender’s security instrument which does not relate to a transfer of rights of occupancy in the property;
(2) the creation of a purchase money security interest for household appliances;
(3) a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;
(4) the granting of a leasehold interest of three years or less not containing an option to purchase;
(5) a transfer to a relative resulting from the death of a borrower;
(6) a transfer where the spouse or children of the borrower become an owner of the property;
(7) a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property;
(8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or
(9) any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board.
Cornell Law on Garn - St. Germain
What that means in RED above is that when Momma or Daddy dies, the lender is PROHIBITED by this act from calling the mortgage due, or enacting the Due on Sale Clause in the mortgage; (commonly known as para 18 in a std Freddie Mac Mtg), when inherited by a spouse OR their children; (or relative of any sort, really). Could even be a neice, nephew, grandchild, etc.
Also one other piece of decent advice in this thread was the caution about holding title to real estate as Tenants in Common, meaning that the 5 siblings each have their name on the property as a pro-rata share of ownership. If one of the sibs gets into financial trouble, it could taint of cloud the title to the real estate and potentially expose the equity in the property to creditors of the one sibling. So unless all parties of the TIC ownership are above reproach finacnially, it is best to avoid this type of ownership. The property could be held in Trust or in some form of an LLC which would avoid the risks of TIC ownership.
Any questions on the above...? Hopefully that clears up the inacuriousies stated in prior posts. In the words of Leslie Isaiah Gains, (a famed black Cincy Atty who wears a bollar hat, and said in his VERY deep voice): "If you needz me, you callz me".
Ps. One other little tidbit of this Act passed in 1982, it is was dealt with the S&L crisis, as well as increasing the FDIC insurance limits from 40K to 100K on deposits of FDIC insured institutions. Now that has been increased in 2008 to 250K per inst of deposits.
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