Mortgage Arrears/Executor of the Estate

roddo2013

Hi, apologies if this is in the wrong sub-forum but it seemed the most appropiate to me.

Basically my Father died last year leaving my younger sister and I living in the house. There was no insurance policy and unknown to me previously there are a large amount of arrears owed to the lender. I am executor of the estate.

About a week after my Father's death I rang the mortgage company who said they would freeze the mortgage for 3 months. I tried to get more information from them but obviously they needed a death certificate and a copy of probate. Even when I did provide these they did not say much apart from suggesting I pay an installment.They also said they would not consider a transfer of equity.

After taking a while to decide my options I thought I would be able to contribute to the monthly mortgage payments. I then talked to a family friend (an IFA) and gave him a letter of authority to talk to the lender on my behalf. This is when they said that they had started proceedings to repossess the house. My friend advised me the best option would be to try and sell the property or let the mortgage company have it.

Knowing that if the mortgage company repossess the house would go to auction, I got the house valued. There is very little equity in the house and after estate agent fees it would hardly be worth my time to sell the house, prior to this I rang the lender to inform them of my intention to sell and mentioned repossession, they then replied saying that they "hadn't even started the ball rolling" to get the house repossessed, and suggested I make an installment of whatever I could afford towards the arrears- my friend advised me that I shouldn't do this as it could make me liable to the arrears personally.

I was then offered a sum for the house that falls short of the mortgage, informed the lender of this who in turn sent out a "shortfall sale" pack, which again mentions that I would be personally liable my any loss incurred from the sale. The letter looked pretty standard and appeared to address the mortgage holder rather than someone in my position.

In summary, the lender has told my IFA that the house is going to be repossessed only to say the opposite to me. They have also mentioned twice that I would be personally reponsible for the arrears, even saying on the phone that the arrears would now be showing on my credit rating. I am sure this is wrong?

Ideally, I would like to stay at the property although I'm hesitant about taking on the arrears and my rights after these have been paid. The lender has been fined in the past for treating customers unfairly, I'm also curious as to whether I could claim back any charges for arrears.

Thanks for reading, and I hope I've been clear enough.

Janey51

I have no idea what to do lol but bumping it up for you.

Gary123456790

Sounds like you really need the advice of a good probate solicitor rather than an internet forum.

As I understand it you cannot inherit debt, and with little equity and arrears it looks like there is little/no value to inherit (unless there are other assets?). I would not pay anything towards the current mortgage, but the sooner you sort it out the better as they will be adding charges to the mortgage.

As executor your job is to wind up the estate and settle all financial matters - i.e. sell the house. If you/your sister wish to buy the house you will need to look into a new mortgage to buy the house from your dads estate.

Presuming you want to stay in the house, could you get a mortgage?

Gary.

dunstonh

I was then offered a sum for the house that falls short of the mortgage, informed the lender of this who in turn sent out a "shortfall sale" pack, which again mentions that I would be personally liable my any loss incurred from the sale.

You cannot be personally liable for the debts of another unless you guaranteed the debt or were party to the mortgage (i.e. joint mortgage)

Ideally, I would like to stay at the property

That doesnt appear likely given that the executor has a legal responsibility to settle the estate and the only way that is going to happen is for you personally repay the debt and get the property transferred or the property is sold.

The lender has been fined in the past for treating customers unfairly

irrelevant.

i'm also curious as to whether I could claim back any charges for arrears.

unlikely as arrears fees are considered fair and there is very little success involved here apart from a few sub-prime lenders.

roddo2013

Ok thanks for the replies, I am in the process of obtaining legal advice, but thought it can't hurt to find out some basics.

There are little or no assets and it would be very unlikely that I could get a mortgage. I understand all points made but what would the difference be if I made payments towards the current mortgage rather than having my own?

Thanks for confirming that I'm not personally liable for the debt. I haven't checked my credit rating lately but surely this would be very wrong of them to put the arrears on there?

I'm sure the lender comes into the few sub-prime lenders you mention- it's Kensington.


Thanks again for your time and replies, apologies if I seem a little dense!

Let_Us_See

As executor to your late father's estate you have well defined legal responsibilities which should have been explained to you when obtaining probate, and hopefully, when you agreed to become appointed executor. Consequently, please take care to ensure you do not become confused with your legal duties and your personal wishes.

However, if you really wish to remain in the property and there is no legal impediment to prevent this, or objection from sister (who I imagine is also a benificiary?), or negative equity, or lack of deposit, and you can meet a lender's terms and conditions, then this should be possible.

But........don't forget your duties as executor and to other beneficiaries.

roddo2013

Let_Us_See wrote: »

As executor to your late father's estate you have well defined legal responsibilities which should have been explained to you when obtaining probate, and hopefully, when you agreed to become appointed executor. Consequently, please take care to ensure you do not become confused with your legal duties and your personal wishes.

However, if you really wish to remain in the property and there is no legal impediment to prevent this, or objection from sister (who I imagine is also a benificiary?), or negative equity, or lack of deposit, and you can meet a lender's terms and conditions, then this should be possible.

But........don't forget your duties as executor and to other beneficiaries.

Ok, understood. There would be no objection from my sister, as you can probably guess we are both pretty young.

I've been quite fortunate that the estate has been relatively uncomplicated. Creditors have nearly all been dealt with, so as you say it would come down to a negotiation between me and the lender.

Let_Us_See

..................and a suitable deposit. Please remember that on final settlement of your father's estate you will simply be acting as just another mortgage applicant.

TonyMMM

roddo2013 wrote: »

Ok thanks for the replies, I am in the process of obtaining legal advice, but thought it can't hurt to find out some basics.

There are little or no assets and it would be very unlikely that I could get a mortgage. I understand all points made but what would the difference be if I made payments towards the current mortgage rather than having my own?

Thanks for confirming that I'm not personally liable for the debt.

You could become personally liable if it was shown that you didn't carry out the role of executor correctly.

If there are insufficient assets in the estate to clear all the debts,and you have distributed what assets there are to the creditors correctly, in the correct order of precedence, then any further debts are written off.

dotdash79

Make sure that they aren't any savings with the mortgage company as they will take this against the arrears even though by law they should release this.

The co-op took money from my mums estate to pay towards a loan, even though they was told the money was being used to pay for the funeral. We complained and got £1000 back off them.

The order that creditors are delt with in an estate is this:

Funeral service
Lawer
Everyone else

ValHaller

roddo2013 wrote: »

There are little or no assets and it would be very unlikely that I could get a mortgage. I understand all points made but what would the difference be if I made payments towards the current mortgage rather than having my own?

Thanks for confirming that I'm not personally liable for the debt. I haven't checked my credit rating lately but surely this would be very wrong of them to put the arrears on there?

In your situation, I would suggest that you do not pay a penny towards the mortgage unless and until you can convince yourself that you can clear the arrears and keep up payments. And if you do convince yourself, then formalise the arrangement with the lender - including the matter of arrears - IN WRITING before you pay a penny.

Unless as executor you have transferred the house to yourself and your sister, it would be very wrong for any of this to go on your credit record. Assuming that you have not done a transfer, the house belongs to the estate of your late father - and you should keep it that way, even to the point of being repo'd, until such time as you are clear about the implications of doing the transfer.

Unless you would save money in the long run by covering the mortgage, compared to renting and the difference would clear the arrears in a relatively short time, you may do better not to try and keep the house. If the arrears are substantial, this will be a millstone around your necks which will actually set you further back in any plans to own your own home.