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 the title to a house:
- 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 evaluating the borrower’s “ability to repay.” When the borrower already has the 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.
Tip: You may need to show the mortgage servicer proof of your right to the home. In the case of inheritance, for example, that proof might include a copy of the executed will and death certificate or a letter from the executor of the deceased person’s estate. The documents that will prove the death of the borrower may vary from state to state.
If you need advice for your situation, you may want to get help from a housing counselor. You can call (888) 995-HOPE (4673) to be connected to a HUD-approved housing counseling agency. You can also find a housing counselor near you.
If you have a problem with your mortgage, you can submit a complaint with the CFPB online or by calling (855) 411-CFPB (2372).