Scared of Due-On-Sale Clause! ( California )

Forum|Forum|7 years ago
February 28, 2019
1 reply
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Hello,

My mother-in-law passed away in December 2017. My wife and I moved in to her house January 2018 and have been making the house payments ever since. My wife is the only child and her father passed away years ago.

My wife just got appointed administrator of the estate by the courts. We want to keep the house and continue living in it but we are afraid to contact the lender because they might require the loan due in full. We both have 800+ credit scores, but we also have school loans and my wife just started her new job, so qualifying for any loan is going to be a problem.

No trust was left so I don't think we qualify for the Garn-St. Germain Act. So, I am looking for anyone with experience in this. We want to call and get the loan under our names, but are terrified that the lender will require us to apply for a new loan and we won't qualify and then we will lose the house.

NCPERSON1

the risk you point out is certainly true...however, can you go find out from the servicer who owns the mortgage ( yon know who SERVICES it, but the question is who OWNS)
 
in the link below are the Fannie Mae requirements for an assumption, which is what you would want to seek.  
 
https://www.fanniemae.com/content/guide/servicing/d1/4.1/02.html\
 
My read is that the assumption is automatic under this condition (this is stated about half way down the page.
 
A transfer of the property (or, if the borrower is an inter vivos revocable trust, a transfer of a beneficial interest in the trust) to

a relative of the deceased borrower (or, in the case of an inter vivos revocable trust borrower, to a relative of the individual who established the trust), as long as the transferee occupies the property;
 
the investor has an incentive to permit assumption under these conditions because THEIR risk is that there is no money in the estate to pay the mortgage (which you have been graciously paying although you are under no legal obligation to do so) and the last thing they want to do is foreclose on a property when an heir is living in it and making the payments on time - one less headache for them to deal with!!!  
 
there is a better than 50/50 change that Fannie or Freddie own it; you can just pop your loan number into the looks below and see if there is a match 
 
https://ww3.freddiemac.com/loanlookup/
 
https://www.knowyouroptions.com/loanlookup
 
remember you are answering in the lookup as if you were your mother-in-law - not yourself 
 
let me know what you find out! 
 
 
 
But it is critical to figure out who the investor is before discussing the assumption issue - all investors have different requirements. 

The due on sale clause is effectively in every fixed rate mortgage in the country; it has nothing to do with California