Estate & Probate · For executors and heirs
What Happens to the Mortgage When Someone Dies in Washington
The short answer
The mortgage does not go away when the owner dies. It stays a lien on the house, and the payments need to keep being made, usually by the estate, until the house is sold or the loan is paid off at closing. Tell the servicer about the death and ask to be confirmed as a successor in interest, so it will talk to you about the account. Federal law generally stops the lender from calling the loan due because the house passed to a spouse, a child, or a relative who lives in it, so that person can often keep the existing loan.
The loan does not end at death
A mortgage (in Washington, usually a deed of trust) is secured by the house, so it stays attached to the house after the owner dies. Nothing is forgiven, and interest keeps running.
While the estate is open, the personal representative normally keeps the payments current from estate funds, along with the property taxes and insurance. When the house sells, the escrow company pays the loan off from the sale proceeds at closing, and what is left goes to the estate.
If the payments stop, the loan falls behind like any other: late fees first, and eventually foreclosure, which can cost the family the equity. That is why the mortgage belongs on the executor's first-week list, next to securing and insuring the house.
Tell the servicer, and ask to be confirmed as a successor in interest
Servicers will not discuss a loan with just anyone, so the first call is to say the borrower has died and that you now own, or will own, the house. Federal servicing rules require the servicer to communicate promptly with a potential successor in interest, tell you which documents it needs to confirm your identity and ownership (usually a death certificate plus the will, letters, deed or trust that shows how the house passed), and then promptly tell you whether you have been confirmed.
Once confirmed, a successor in interest can get information about the account and apply for help, such as a repayment plan or a loan modification, if the payments become hard to keep up. You do not have to take over the loan to be confirmed.
Send documents in a way you can track, keep copies, and write down the date and name of everyone you speak with.
Can the bank call the loan due, or can the family keep it?
Most mortgages have a due-on-sale clause that lets the lender demand full payment when the house changes hands. A federal law, the Garn-St Germain Act, bars lenders from using that clause for certain transfers of a home with fewer than five units, including when the house passes on the death of a joint owner, to a relative because of the borrower's death (when that relative lives or will live in the house), to the borrower's spouse or children who become owners, or into a living trust the borrower still lives in and benefits from.
In practice, a surviving spouse, or a child who inherits the house and moves in, can usually keep the existing loan by continuing the payments instead of refinancing. When the existing interest rate is lower than today's, that can be worth a great deal, including in a buyout where one sibling keeps the house.
The protection is narrower when no family member will live there, for example when heirs plan to rent the house out. Then the lender may be able to call the loan due, and selling or refinancing is the usual path. Ask the servicer before deciding.
Who is personally responsible for the debt?
The mortgage is a debt of the person who died, and it is paid from the estate and secured by the house. Children and other heirs are generally not personally responsible for it unless they signed the loan themselves, as a co-borrower or co-signer.
A surviving spouse should ask an attorney. In Washington, a community property state, a debt taken on during the marriage may be a community debt, and how the house passes (a community property agreement, a survivorship deed or probate) changes the answer.
The personal representative is not personally liable for the loan either, but must pay the estate's debts before distributing to heirs. Handing out estate assets first can make the personal representative personally responsible.
When the estate has no cash to make the payments
It is common: the house is the estate's main asset, and the account the payments came from is frozen or empty. Call the servicer early, before a payment is missed if possible, and ask what options it offers while the estate is being settled, such as a short forbearance or a repayment plan.
Heirs sometimes cover the payments themselves to protect the equity. If you do, put it in writing as an advance or loan to the estate, keep proof of every payment, and ask the estate's attorney how it will be repaid from the sale.
The fastest relief is usually a sale. A personal representative with nonintervention powers can sell without a court order once appointed, and the loan is paid off at closing.
If there is a reverse mortgage
A reverse mortgage generally becomes due and payable when the last borrower dies. The servicer sends a due-and-payable notice, and the heirs then have 30 days to buy the house, sell it, or turn it over to the lender. The lender may approve 90-day extensions while the family is actively selling or arranging a loan, so call the servicer as soon as the notice arrives.
Heirs can pay off the loan and keep the house, or sell it, repay the loan and keep the difference. If the house is worth less than the loan balance, the loan is satisfied by selling for at least 95 percent of the appraised value; for the federally insured loan (a HECM), the mortgage insurance covers the rest, so the heirs do not owe the shortfall. Another option is to sign the house over to the lender with a deed in lieu of foreclosure.
Until title passes, the property taxes and insurance are still the estate's responsibility.
Checklist
- Find the latest mortgage statement: the servicer's name and phone number, the loan number, the payment amount and whether taxes and insurance are paid through escrow.
- Call the servicer, report the death and ask what documents it needs to confirm you as a successor in interest. Send them in a trackable way and keep copies.
- Keep the payments current from estate funds if possible. If not, call the servicer before a payment is missed and ask about forbearance or a repayment plan.
- Keep the homeowners insurance in force, and tell the insurer the owner has died.
- Decide with the family whether anyone will live in the house and keep the loan, or whether it will be sold.
- If there is a reverse mortgage, watch for the due-and-payable notice and respond within 30 days.
Related guides
General information, not legal or financial advice. The loan servicer can answer questions about a specific account. Real Property Planning does not refer clients to attorneys.
Frequently Asked Questions
The Mortgage After a Death: Common Questions
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