Florida Mortgage & Deceased Spouse
I am paying a mortgage, but recently learned my name is not on it. Can I walk away and not have it affect my credit rating?
My late husband and I purchased our primary home in Florida in 2005 and he passed away in 2006. We had been paying our mortgage on time every month (the loan was an interest-only) and we were in the process of re-financing to a fixed when he passed. I had still been paying on time until approx. 4 months ago when I learned from my mortgage lender that my name is "not" on the Note, but is on the Deed, and if I chose to no longer pay and just walk away, that I could do so (the loan will be re-adjusting in July). I spoke with two different attorneys before I stopped paying my mortgage and both told me that since my Social was not affiliated with the Note, that my Credit Score should not be compromised in any way. Problem is, I have just learned that it has been damaged with the non-payments. My question is: Can my lender ruin my credit if I am not on the mortgage note itself?
- Listen to the legal advice from your attorneys.
- Correct errors in your credit report.
You need to take two actions. First, you need to hire an attorney who can explain your rights and liabilities in your situation. Second, you need to clear the error on your credit report.
Proper Legal Advice
Generally speaking, I do not contradict a reader's attorney. The local attorney will have access to all relevant information (which I do not) and as an attorney licensed in that reader's state, is more versed with the reader's state laws than I. The fact you have already consulted with two attorneys and, presumably, received the same advice tells me not to wade in here with alternative legal theories.
From your information, your name was not on the originating loan with the bank but there is no indication whether your name was in the refinancing documents. Did the attorney's review these documents? Has the decedent's estate passed through probate? Did you hire the attorneys or speak with them on an informal basis? Have you refinanced the decedent's mortgage in your name? I ask these questions because the attorneys you contacted may not have had all the information at hand or made assumptions that were not accurate. You may wish to hire an estate planning attorney to review all of the estate issues and review all of the the mortgage and probate documents in detail. Ask the attorney if the legal doctrine of "laches" applies to you in this situation.
Since the originating loan was in your husband's name with his social security number as the identifier that the bank would use for reporting to the three credit bureaus, it would seem reasonable that the reporting agencies would not have any indications about you. It is prudent to follow the attorney's advise, however, regarding ceasing the mortgage payments and completing the probate of your husband's estate. A Florida attorney specializing in estate planning will be able to answer the questions about your mortgage contract and the obligations in Florida.
Also, assuming the bank has the information about the death of your husband, the bank should have handled the mortgage payments differently. If you do want to stay in the residence, you will need to finance the home or pay the mortgage in full. The mortgage was in your husband's name, so that means you need to refinance or secure a new loan. However, the banks usually discuss this with the surviving spouse with specific details and timelines. It appears you ceased the payments based on information you received from the mortgage lender and after consulting two attorneys.
Correct Credit Report Errors
The attorneys are correct that the credit reporting of one spouse does not affect the other credit's credit score unless the specific credit card or loan is co-signed by the other or attached to the other's credit card with authorization. How the credit reporting agencies received this information is something you will want to investigate and correct because it will affect your ability to get a loan in the future. If the lenders are the same, then a confusion may have occurred where the new loan is confused with the old loan.
When a creditor checks the credit on a potential debtor, this results in a "hard pull" on the debtor's credit report. Each hard pull results in a decrease in the debtor's credit score. Clustered hard pulls are supposed to be ignored as this is supposed to be evidence of the debtor shopping for a car loan, mortgage, and so on. Possibly, the new refinanced loan caused this problem. You will need to verify why the lender is attributing your husband's mortgage to your credit. You may want to review the documents to ensure that your name is not actually on the forms.
I urge you to contact the three major consumer credit reporting agencies and dispute the error. See the Bills.com resource Dispute Credit Report to learn the steps consumers can take to remove incorrect derogatory information from a credit report.
For additional information about the debts of the deceased, see the Federal Trade Commission documents Paying the Debts of a Deceased Relative: Who Is Responsible? and FTC Issues Final Policy Statement on Collecting Debts of the Deceased.
I hope this information helps you Find. Learn & Save.