Deceased Ex-spouse and Mortgage
My ex-spouse died, and my name is still on the mortgage. Do I have to make the mortgage payment?
My ex-husband was awarded the house in a divorce 10 years ago. He died recently and left no will. He never remarried and has no children. I know my name is still on the mortgage although he was awarded the house. My question is what will happen to the house and am I still responsible to pay it off now that he is dead? He has kept up the payments so I'm going to guess that it has some amount of equity so would not be worth less than the loan but I doubt his estate would have enough to pay it off in one chunk.
You do not indicate whether the financial institution that holds the mortgage has been contacted about your ex-spouse's death. If not, the estate's administrator needs to do so immediately because the mortgagor will be contacting you, as co-signer, for payment upon default.
You do not mention any other lingering debts that occurred during the marriage, such as joint credit cards or a car loan, that could be your responsibility. You did not mention if your name is on the title for the property.
I see the following issues in your case:
- Community property issues
- Who is responsible for the mortgage (called a "deed of trust" in California)
- Responsibility for possible deficiency balance or other debt
- Names on the title
Your primary issue is whether you have liability for your ex-husband's mortgage. You do not mention whether the loan was refinanced during or after your marriage. California has specific laws regarding whether a deficiency balance on a mortgage or deed of trust can be collected from the homeowner who defaults (more on this later).
Debt and Death
I surmise you do not wish to possess the property. In cases when there is a death, there are only a few options for lender and co-mortgagor. At death, the lender will either want the mortgage paid in full or the joint mortgagor to continue making payments. Since you are listed on the mortgage, you will be responsible for the payments and any potential deficiency balance regardless of whether your name appears on the title.
If your name appears on the title, and, as you mention, there is no will and your ex-spouse never remarried, it is likely the house became yours at the moment of your ex-spouse's demise.
For more information on debt and death, read the article on Bills.com on Debt Death and Debt Tax; both provide general information on debtors and death. Though your ex-spouse has died, this Bills.com article about removing a name from joint mortgage will provide readers information on what to do in a divorce situation to avoid future debt obligations.
Although your ex-spouse had no will or children, he may still have heirs in the form of brothers, sisters, or parents who have an interest in the estate.
Community Property States
Since you reside in California, a "community property" state, this means that many assets and obligations of one partner created in a marriage become "community" assets or obligations. By extension, this can mean that one spouse can be held liable for many of the debts of the other spouse even if his or her name is not on the accounts which resulted in the debts. The other community property states are Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin and have similar, though not identical rules to the one I just cited.
Creditors and Divorce
A divorce decree is an agreement between two former spouses, but it generally does not modify any contracts with third parties made before the divorce. Generally, if a spouse does not comply with the divorce decree, the legal recourse is to file a lawsuit against the ex-spouse for a breach of contract. The damages would be the amount of any judgment taken against you, if such a judgment occurs. In your case, you ex-spouse died, thus leaving your only recourse to sue the estate if you are deemed liable for any deficiency balance when the home is sold.
One important disclaimer for non-California readers: Community property laws are unique to each state -- no two states share the same laws. The discussion above regarding spousal liability is meant to provide general information about community property as a theory. Your state's laws may vary from the general theory. Therefore, it is important to consult with an attorney in your state who can review the details of your situation and give you accurate and precise advice about your rights and liabilities under your state's laws.
Home Sale Options
If as discussed above you own the property, do not want it, and there is no equity in the property, you should review the federal home sale programs that may be available to you. Bills.com summarized the federal government Home Affordable Foreclosure Alternatives program. This is a must-read article for distressed homeowners who are considering selling their homes.
California Deficiency Balance
When a home is foreclosed upon, the mortgage lender usually auctions the property at a foreclosure sale, applying whatever amount is received at the foreclosure sale to the balance owed on the mortgage. In many cases, the sale price at auction is not sufficient to cover the mortgage and other secured liens on the property, such as home equity loans. The difference between what you owe on the property and what the lenders actually receive is called a deficiency balance.
Under California law, lenders cannot collect on deficiency balances resulting from "purchase money loans." If your first mortgage is the same loan which you and your ex-spouse used to purchase the home, and it was not refinanced, then your first mortgage lender will likely be unable to collect any deficiency balance resulting from foreclosure. However, lenders who provided "non-purchase money" loans, such as second mortgages, home equity credit lines, or refinance loans, are generally able to pursue former homeowners for payment of deficiency balances not covered by the proceeds of the foreclosure sale. So, assuming you did not refinance the first mortgage, you likely do not need to worry about your first mortgage lender pursuing you for payment. However, you will likely be responsible for any deficiency on a second mortgage, home equity loan, or any other obligation secured by the home.
I strongly encourage you to consult with an attorney in your state experienced with community property, estate planning, or debt to help you determine what your obligations are regarding your ex-spouse's home, and your possible ownership interest.
For additional general information, 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.