Financing in Thousand Oaks>Question Details

Jr, Home Owner in Thousand Oaks, CA

I am on title only, not on the loan in Calif.. If my husband dies do I have to qualify for a new loan? Can I just continue to make the payments?

Asked by Jr, Thousand Oaks, CA Tue Oct 11, 2011

I was always on title for 10 years. Refinancing now with only husband on loan. I will go on title with quit claim deed at closing. If husband dies do I have to get my own loan? I will not qualify by myself. Lender won't let me on loan due to high ratios with unreimbursed expenses on tax returns last year. They say they must count against ratios if I am on loan and back end is too high. Husband qualifies on loan by himself fine.

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Steven Ornellas’ answer

I agree with status quo: You could probably just continue to pay the mortgage. After all, when is the last time you heard of a servicer/lender starting a foreclosure because a widower wanted to make mortgage payments - very bad "PR"). You should still seek a legal opinion (hopefully via an estate lawyer with free initial consultations).

Also ask about the use of the Quitclaim as it may be more beneficial to use an Interspousal Grant Deed (IGD). An IGD is typically used to easily transfer real property between spouses so the property is not reassessed for tax purposes, you need to transfer interests in the property, and/or convert “community property” into separate property (California is a Community Property state).

A Quitclaim Deed (QD) releases an owner’s interest in a property without stating the nature of the person's interest or rights, and with no warranties of ownership. Theoretically, a QD prevents the grantor from later claiming they have an interest in the property. My understanding is the IGD is the "stronger" of the two as a QD can allow future claims against title based on the removed individual's actions after the fact. For example, I believe the act of the Grantor making improvements to the home MAY create an "ownership" claim/right.

Confirm all legal subject matter with your lawyer.

Best, Steve
1 vote Thank Flag Link Tue Oct 11, 2011
This is an excellent question, Jr. As long as you make the FULL PAYMENTS on time, it doesn't matter who is on the loan. An acceleration clause in the loan contract "may" state that the loan is due and payable upon death -- but we rarely hear about cases where the lender enforces it -- they just want to collect the contract payments/interest. Sometimes, properties in CA are transferred "subject to" the existing mortgage(s). So, READ your contract first and consult withan attorney to be sure what your specific obligation(s) will be. I hope this helps. And, good luck!
1 vote Thank Flag Link Tue Oct 11, 2011
I had a case like this 1 year ago. One of my former clients passed away and his wife (who was not on the loan) wanted to retain the property. Luckily my clients decided to Quit Claim his spouse on title after closing. Now on title, she has right to the property. She decided to keep quite and continue making payments. To date the current servicing lender has excepted all payments and has not called the Note due via the Acceleration Clause in his loan documents. There are ways to protect yourself via a Family Trusts, I would advise that you and your husband speak to an Attorney or Financial Planner to better prepare for any unforeseen tragic events.

Best of Luck!
0 votes Thank Flag Link Sun Feb 12, 2012
You didn't mention what type of loan. Hopefully, it is not a reverse mortgage. It's best that you discuss this with your estate attorney. You do have a living trust don't you?
0 votes Thank Flag Link Sat Feb 11, 2012
You may continue to make the payments. You would not trigger a "due on sale" provision as long as you make the payments there is nothing anyone can do about it.
0 votes Thank Flag Link Thu Feb 9, 2012

1. How are you appearing on title now? Joint tenancy with right of survivorship? Tenancy in common?
2. Do you and your husband have a will stating how assets will be disposed of upon one's death?
3. If you do a quit claim deed when your husband refinances, then you're renouncing your rights to the property. That is, you will NOT be on title. What is the reason why you would do that?
0 votes Thank Flag Link Thu Oct 13, 2011
You should be fine. Ask if the quitclaim to put you back title can be prepped as an accomodation deed as part of the loan in exchange for a nominal fee. That way you don't have to do it yourself and you won't risk incorrect verbiage on the deed. Being that California is a community property state and the right of survivorship and you're on title, you have the inferred right to make payments without being on the loan.
0 votes Thank Flag Link Wed Oct 12, 2011
Consider consulting with an attorney, he/she can better advise as to any options...
0 votes Thank Flag Link Tue Oct 11, 2011
I would say you could just keep making the payments and it should be ok if you can afford to make them. I would, however, check with both your accountant and attorney regarding this matter. Sometimes the loan has a clause that the lender can call for full payment upon death. They usually do not do that but make sure you are protected.
0 votes Thank Flag Link Tue Oct 11, 2011
I strongly suggest you speak with an estate planner who is an attorney.

This is a sticky one. I believe because you were not on title at the time of inception that the lender would have the right of foreclosure. I am not definitely sure though.

I suggest you ask about right of survivor with an estate lawyer.

Not an easiest to answer.

Harold Sharpe - Broker
So Cal Homes Realty
(951) 821-8211
California Department of Real Estate Broker License # 01312992
0 votes Thank Flag Link Tue Oct 11, 2011
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