You question is best to be answered by dicussing the details (your financial capacity, the inheritence - house, other assets, etc) with a qualified CPA and a probate legal counsel.
You may want to "start" by contacting the following sites for initial FREE legal advisory:
A house is a long term investment. So while it may be upside down now, 7-10 years from now, its value may be in a better position. You didn't provide any details about the house...so if the house is in a "highly desireable" neighborhood and IF YOU CAN afford a modified lower monthly payment (due to the borrower's death - you can request the lender for a hardship loan modification), then I would suggest you to consider keeping the house. Ask yourself this - do you like the house? Do you like the location? Are you renting now...because there are positive tax benefits and wealth building in homeownership. If the house is in a great neighborhood, can you afford buying into this neighborhood on your own, later, without the inheritence?
Assumming your current financial capacity is sufficient to cover a modified mortgage, the lender may modify the current mortgage and provide a forbearance, which means the current total past due amount is "added" to the loan balance and the loan term may be extended to a 40-year term, if needed to, to ensure the modified monthly payment is equal to a max. 31% of your total income.
The local and national economies will get better, albeit slow, but they will improve then in turn the real estate market will also recover eventually.
This is a special circumstance the bank can foreclose on the property and try to sell it for the most possible. You might also be able to negotiate a short sale with the bank once they understand the circumstances. As has been advised, this is a complicated case and I would recommend that you consult with an attorney. It's important that this foreclosure does NOT end up registered to you personally.
I agree with Jenny that it's also a good idea for you to run all of this past a probate attorney and CPA.
Owing more than what the house is worth is a big deal, but not necessarily a reason to give up a family home. Does the house mean something emotionally to you, that would make it worth it to you to find a way to keep it? If so, check out your options.
$100,000 is about $567 per month at an interest rate of 5.5% if that helps you put that in perspective.
Good luck with your decision, and best wishes to you.
I am sorry to hear about your mom.
You may have options. There are a few variables.
Since the loan is about 20% upside down, negotiating with the lender for a Short Refinance may be a posability.
What that entails is going in and negotiating to get a new restructured loan around the current market value. This depends on a few things. Who the lender is, additional debt .
I work with several options depending on my clients credit, loan amount, and what they want their out come to be.
I love helping my clients keep their home if it makes sense for them and the investor/lender.
If you would like to discuss options feel free to give me a call.
I am sorry about your mom
925 699 5041
An estate is worth so much. If the estate has no value the banks can get nothing.
The only issue would be if the estate was worth $600k and the liabilities were $587k you would find that those owed money would have a legal claim to it.
Check to see if the house has a recourse or non-recourse loan on it. If non-recourse just let it go and do not lose $100k of inheritance. I would talk to your probate lawyer to find out the legal ramifications regarding the house. They should explain it simply and quickly.