I recently inherited a house. The mortgage lender said it’s required to determine my “ability to repay” before it will let me take over the mortgage loan. Is this true?

Not necessarily.

If you already have title to the house, the CFPB’s rules don’t require the lender or servicer to determine your ability to repay before it lets you take over the mortgage loan.  

Here are some common ways to get title to a house:

  • Inheritance
  • Legal separation or divorce
  • Other types of transfers:
    • Transfers to living trusts
    • Transfers from parents to children before the parent dies
    • Joint Tenancy with Right of Survivorship, when someone who co-owns a home with someone else gets full ownership when the other person dies
    • Other family-related transfers

Usually, when someone takes out a mortgage, a lender is required to make sure the borrower can repay the loan. This is called the evaluating the borrower’s “ability to repay.” When the borrower already has title to the house before they take on the mortgage loan, a lender or servicer is not required to evaluate the ability to repay the loan.

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