My father co-signed for my brother's home, it was not listed as part of the estate. Late payments

[djd14150]

Jurisdiction

New York

My father passed away many months ago. He co-signed for my brother's current home. Our estate attorney decided not to list it as part of the estate. My brother told me in confidence that he would most likely pay off the remaining mortgage using the inheritance that he received.

Shortly after my father's passing, my brother moved out and got his own apartment. He is telling me that his wife, who is to receive the home by him, is in the process of attempting to refinance. However, the mortgage bills are still arriving at my father's estate address, indicating that the mortgage is still in his name.

I obtained a copy of the deed, and it listed my bother, father, and my brother's wife as as joint tenants with rights of survivorship (State of NY). All 3 of them are listed on the mortgage as well equally it appears.

My father also had a will and it demanded that all his just debts be paid. My concern is that if the mortgage is defaulted on, could we be made to sell my father's estate to satisfy their mortgage, or does the "right of survivorship" clause protect our estate from the mortgage creditor and pass the remaining mortgage onto the survivors?

 

[adjusterjack]

if the mortgage is defaulted on, could we be made to sell my father's estate to satisfy their mortgage,

Yes.

does the "right of survivorship" clause protect our estate from the mortgage creditor and pass the remaining mortgage onto the survivors?

No.

The mortgage loan contract and ownership are two entirely different things.

NY is a "recourse" state which means that the mortgage company can foreclose, take the property, and sell it. If the sale doesn't cover the debt the lender can come after those who signed the loan contract.

You might be more comfortable if you find out the current mortgage balance and the market value of the home. If the value is higher than the balance, the estate should be OK. If it's lower and there is a shortage to pay, you might be able to negotiate a lump sum cash payoff with the lender.

Send the bills to your brother and/or his wife. Tell them that they should be paying them if they don't want to lose the house.

 

[djd14150]

The mortgage is about half paid, so it is definitely worth way more than what they owe.

I did go to the bank and talk to one of the branch managers and they confirmed that non-payment/default would result in a foreclosure.

But my worst-case-scenario thought process is that my brother's wife actually sues the executors of the estate to prevent her house from being foreclosed on since the mortgage is in fact in my late father's name.

My probate attorney did not list the property as part of the estate. He did mention that the estate could be forced to take out a second mortgage.

 

[adjusterjack]

Why aren't your brother and his wife making the payments? Have you given them the bills? Have you asked them about paying them? How many payments are they behind? Do they understand that they can lose the house? Are they getting divorced? Is there hostility between them? Are they wanting the estate to make the payments?

 

[djd14150]

They are getting a divorce according to what my brother tells me but the timing is suspicious (it definitely feels planned out). I am in contact with my estate attorney. He was very displeased about it, and told my brother to make sure to pay on time.

I have been putting the mortgage bills in their mailbox as they live right next door. It appears as though they expect the estate to pay or something as his wife has entered her "villainous mode" and has ceased all contact with us.

As I am one of the executors of the estate, the mortgage company will not even give me any information about whether they are behind or not other than me opening up the mortgage bill when it arrives.

The best I can do is keep an eye on the pre-foreclosure listings.
I am not sure what the loopholes are relating to her being able to claim that she never got the bills since they are mailed to the estate.

 

[adjusterjack]

As an executor you have the right to information about your father's debt.

Might just take a letter from your attorney to get the lender to open up about the status.

Or maybe a subpoena if there is a probate court case in progress.

PS - What do you mean by "one of the executors"? Is there more than one? Are you co-executors or is one primary or the other contingent?

 

[djd14150]

Me and my brothers are all the executors, equally. which is why it's so hard to get things done. We all have to be included in any legal matters.

 

[Red Kayak]

Observation: the biggest $ mistake many couples make in a divorce is insisting on not selling the house.

Your deadbeat bro and his deadbeat STBX need a reality check: either they get themselves up to date on the mortgage payments like real adults, or the house gets sold and they get housing that they can actually afford.

Here are some options that I can think of:
1) pay the bills out and deduct those costs out of deadbeat bro's inheritance,
2) send bills to the SIL in a way that is documented so she can't say she didn't get them. If that means sending them certified, then so be it.

Where did your dad live? With them? With you? Somewhere else?

 

[adjusterjack]

Me and my brothers are all the executors, equally. which is why it's so hard to get things done. We all have to be included in any legal matters.

That's a mistake you should avoid when you plan your estate. One executor. Full stop.

 

[zddoodah]

My father . . . co-signed for my brother's current home.

Meaning your father personally guaranteed your brother's mortgage loan. Correct?

Our estate attorney decided not to list it as part of the estate.

Didn't list what? Didn't list it on what? Who is the executor of the estate?

Generally, the executor of an estate will compile, file and serve a list of assets (inventory).

Since your father, brother and sister-in-law jointly owned the home in question with the right of survivorship, your father's interest passed to your brother and sister-in-law by operation of law (i.e., automatically) upon his death. As such, there would be nothing to list on an inventory of assets in your father's estate.

Shortly after my father's passing, my brother moved out and got his own apartment. He is telling me that his wife, who is to receive the home by him, is in the process of attempting to refinance.

So...your brother and his wife are in the process of divorcing?

the mortgage bills are still arriving at my father's estate address, indicating that the mortgage is still in his name.

First of all, is the mortgage in his name, or did he merely "co-sign"? Second, has anyone contacted the mortgage lender and informed it that your father died?

My father also had a will and it demanded that all his just debts be paid. My concern is that if the mortgage is defaulted on, could we be made to sell my father's estate to satisfy their mortgage, or does the "right of survivorship" clause protect our estate from the mortgage creditor and pass the remaining mortgage onto the survivors?

The executor's lawyer needs to review the mortgage and advise the executor whether the estate has liability under the mortgage. That said, it's certainly possible, in the abstract, that estate assets might have to be liquidated to pay estate debt.

my worst-case-scenario thought process is that my brother's wife actually sues the executors of the estate to prevent her house from being foreclosed on since the mortgage is in fact in my late father's name.

I'm going to point out again that, in the second sentence of your original post, you wrote that your father "co-signed." However, this is now the second time that you've written that the mortgage is in your father's name, so you're going to need to clarify this. Regardless, I think it unlikely that your sister-in-law would have any viable cause of action in this situation.

 

[djd14150]

Zdoodah, sorry for the confusion. I will try to answer the best I can.

There's a lot of things I am not even sure about.....

1) My county property search website lists my father, my brother, and his wife under both the mortgage ("Mortgagor") and deed when performing a simple property search. I did not see the actual copy of the mortgage.

2) Me and my brother are both executors.

3) According to my brother, he and his wife are getting divorced

4) My brother is offended that I'm interested in the mortgage details, and the bank (the mortgage creditor) will not give me any details. My brother's wife is supposedly trying to refinance the home in her name.

5) The mortgage bill is only in my father's name. I'm not sure if that means he is the primary borrower (see #1)

6) I do not know how to obtain an actual copy of the mortgage or if I am legally entitled to receive one.

7) Our estate attorney did not list my brother's house in the petition for probate to avoid creating an "estate tax", to keep it listed as a small estate, in order to keep the value of the assets under a certain threshold.

 

[adjusterjack]

1) My county property search website lists my father, my brother, and his wife under both the mortgage ("Mortgagor") and deed when performing a simple property search. I did not see the actual copy of the mortgage.

Take another look. You should be able to print out or order a copy.

2) Me and my brother are both executors.

A serious mistake that your father made.

3) According to my brother, he and his wife are getting divorced

You can check their local family court to see if a divorce case has been started.

4) My brother is offended that I'm interested in the mortgage details, and the bank (the mortgage creditor) will not give me any details. My brother's wife is supposedly trying to refinance the home in her name.

As an executor you can subpoena the mortgage company's records. As an executor your brother can have the subpoena quashed. See why co-executors is a bad idea.

5) The mortgage bill is only in my father's name. I'm not sure if that means he is the primary borrower (see #1)

That the bill is in his name is likely because he was listed first. There is no "primary" borrower. All three are jointly and severally liable for the mortgage.

6) I do not know how to obtain an actual copy of the mortgage or if I am legally entitled to receive one.

Same as my response to question 1. You can see and get a copy from the county recorder. It's public record. That should tell you how much was originally borrowed but it won't tell you what the current balance is or whether it's in pre-foreclosure. That you get from the mortgage company. Or you may be able to extrapolate the approximate current balance if the interest rate is shown on the mortgage or if you can figure out the prevailing mortgage interest rate when the loan was first made.