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Paying off house that is in estate

Posted: Thu Oct 05, 2017 4:30 pm
by Determined
I understand the basics of paying off a mortgage. I am living in my mother's condo and paying the mortgage. I moved there shortly before she unexpectedly died, and we had not changed ownership. She lived in Florida. That home is in trust and will be sold. I am the executor and trustee.

The mortgage is 3.125%. That in itself is no reason to pay it off There is about $65,000 left on a 20 year mortgage that matures in 2030. There is no date to close the estate, but at that time, I do not want to remortgage it. It is highly likely I will be relocating in the next year or two.

Do I wait and keep cash in high interest savings until I have to close the estate and take ownership, or do I pay it off now and be done with it? The lawyer knows the situation.

Re: Paying off house that is in estate

Posted: Thu Oct 05, 2017 4:33 pm
by Gill
Are you the sole beneficiary of the estate and trust? Is the trust terminating? Are you paying the mortgage from estate funds or your personal funds? That might have a bearing on the advice you will receive.
Gill

Re: Paying off house that is in estate

Posted: Thu Oct 05, 2017 5:05 pm
by Determined
My brother and I are beneficiaries of the estate and trusts. It has already been determined that I will own the condo, and the equity according to the step up basis has been worked out. This condo is in estate. I have paid and continue to pay from my personal funds. That includes escrowed taxes and insurance. The insurance is in my name.

Re: Paying off house that is in estate

Posted: Thu Oct 05, 2017 6:09 pm
by Gill
No reason not to pay it off but if you do that and your brother is an equal beneficiary, you should distribute an equal amount to him.
Gill

Re: Paying off house that is in estate

Posted: Thu Oct 05, 2017 6:42 pm
by Determined
We have the value of the condo worked out with other assets. He and have fortunately done very well working together.

Re: Paying off house that is in estate

Posted: Thu Oct 05, 2017 7:09 pm
by Carefreeap
I wouldn't pay it off; that's a great rate!

When my mom passed in 2008 I kept her first mortgage (situation was complicated but it made sense not to refinance in my name) and transferred title from the Trust's name to my Trust. I sold the condo this last July nine years after she passed.

You'll want to submit paperwork which authorizes you to have access to the account. I think I had to provide the death certificate.

The only (minimal) complication was after the loan was paid off I got a check for around $50 made out to "Estate of Carefree's Mom". I Since I had closed the estate seven years before there was no Estate bank account. I simply did a mobile deposit on my phone and sign my name with TTEE. No problem with the deposit.

Re: Paying off house that is in estate

Posted: Thu Oct 05, 2017 8:31 pm
by Gill
Are you sure the mortgage isn't due now as the result of change of ownership?
Gill

Re: Paying off house that is in estate

Posted: Thu Oct 05, 2017 9:25 pm
by Determined
The mortgage is not due. The bank knows I am paying it. We have already determined I cannot assume the mortgage. My plan is to pay it monthly until someone says I have to take ownership. That means keeping money liquid to do so. I could do that now if necessary. It would be easier in 2018. My question is does it makes sense to keep cash in savings account just for the purpose of paying the mortgage off in four to six months.

Re: Paying off house that is in estate

Posted: Thu Oct 05, 2017 11:26 pm
by denovo
Determined wrote:
Thu Oct 05, 2017 9:25 pm
We have already determined I cannot assume the mortgage.
Why?

Re: Paying off house that is in estate

Posted: Thu Oct 05, 2017 11:41 pm
by Watty
Determined wrote:
Thu Oct 05, 2017 4:30 pm
That home is in trust......
Since the home is is a trust is there any reason that the condo could not be sold now?

In addition to getting it sold while the housing market is still hot, like it is in many areas, that would also save the monthly fees of holding it until the estate is settled then putting it on the market.

Re: Paying off house that is in estate

Posted: Fri Oct 06, 2017 11:49 am
by Determined
denovo wrote:
Thu Oct 05, 2017 11:26 pm
Determined wrote:
Thu Oct 05, 2017 9:25 pm
We have already determined I cannot assume the mortgage.
Why?
I asked the bank. They said the type of mortgage could not be assumed.

Re: Paying off house that is in estate

Posted: Fri Oct 06, 2017 12:52 pm
by Determined
Watty wrote:
Thu Oct 05, 2017 11:41 pm
Determined wrote:
Thu Oct 05, 2017 4:30 pm
That home is in trust......
Since the home is is a trust is there any reason that the condo could not be sold now?

In addition to getting it sold while the housing market is still hot, like it is in many areas, that would also save the monthly fees of holding it until the estate is settled then putting it on the market.
I currently live in the condo that is in estate. The house in trust will be sold after we have the chance to go through it.

Re: Paying off house that is in estate

Posted: Fri Oct 06, 2017 5:08 pm
by Carefreeap
Determined wrote:
Fri Oct 06, 2017 11:49 am
denovo wrote:
Thu Oct 05, 2017 11:26 pm
Determined wrote:
Thu Oct 05, 2017 9:25 pm
We have already determined I cannot assume the mortgage.
Why?
I asked the bank. They said the type of mortgage could not be assumed.
But you don't have to. Under Garn St. Germain banks can't exercise the due on transfer clause in a loan if the property is transferred to a Living Trust or to a family member under the terms of a will.

See section (d) 5
https://www.law.cornell.edu/uscode/text/12/1701j-3

Re: Paying off house that is in estate

Posted: Sat Oct 07, 2017 6:53 am
by Determined
Carefreeap wrote:
Fri Oct 06, 2017 5:08 pm
Determined wrote:
Fri Oct 06, 2017 11:49 am
denovo wrote:
Thu Oct 05, 2017 11:26 pm
Determined wrote:
Thu Oct 05, 2017 9:25 pm
We have already determined I cannot assume the mortgage.
Why?
I asked the bank. They said the type of mortgage could not be assumed.
But you don't have to. Under Garn St. Germain banks can't exercise the due on transfer clause in a loan if the property is transferred to a Living Trust or to a family member under the terms of a will.

See section (d) 5
https://www.law.cornell.edu/uscode/text/12/1701j-3
Thanks. I forgot about that. I had mentioned it to my brother this summer.

Re: Paying off house that is in estate

Posted: Sat Oct 07, 2017 3:44 pm
by Carefreeap
Determined wrote:
Sat Oct 07, 2017 6:53 am
Carefreeap wrote:
Fri Oct 06, 2017 5:08 pm
Determined wrote:
Fri Oct 06, 2017 11:49 am
denovo wrote:
Thu Oct 05, 2017 11:26 pm
Determined wrote:
Thu Oct 05, 2017 9:25 pm
We have already determined I cannot assume the mortgage.
Why?
I asked the bank. They said the type of mortgage could not be assumed.
But you don't have to. Under Garn St. Germain banks can't exercise the due on transfer clause in a loan if the property is transferred to a Living Trust or to a family member under the terms of a will.

See section (d) 5
https://www.law.cornell.edu/uscode/text/12/1701j-3
Thanks. I forgot about that. I had mentioned it to my brother this summer.
You're welcome and I'm happy to help. This is not information that Banks volunteer. Also their employees can give out incorrect information. I actually had one employee from Greenpoint Mortgage advise me that my late mother could not have transferred title to her Living Trust because the bank wouldn't have allowed it. <rolls eyes> But my favorite was a later call from the same bank trying to encourage me to formally assume the loan "so that I could get credit for it on my credit report and deduct the interest". Yeah, right! I want to have subprime loan in my name and have even more debt added to my debt ratio. I sold that property about a year later after it went through an expedited probate (six months!) in CA.

I had no problem deducting the interest on the loan for the other property during the 8 years it was titled in my Trust's name. I don't know if these bank employees were just ignorant or coached to give misleading info but I wasn't pleased.

Good luck with your situation.

Re: Paying off house that is in estate

Posted: Sat Oct 07, 2017 4:00 pm
by Determined
Carefreeap wrote:
Sat Oct 07, 2017 3:44 pm
Determined wrote:
Sat Oct 07, 2017 6:53 am
Carefreeap wrote:
Fri Oct 06, 2017 5:08 pm
Determined wrote:
Fri Oct 06, 2017 11:49 am
denovo wrote:
Thu Oct 05, 2017 11:26 pm


Why?
I asked the bank. They said the type of mortgage could not be assumed.
But you don't have to. Under Garn St. Germain banks can't exercise the due on transfer clause in a loan if the property is transferred to a Living Trust or to a family member under the terms of a will.

See section (d) 5
https://www.law.cornell.edu/uscode/text/12/1701j-3
Thank you again. The bank is definitely not a help, and I read about Garn St. Germain on my own. There is a personal and business relationship at this bank (5/3) from my dad's small business. It's taking a while to untangle everything with various loans and accounts. I am working on moving everything but the mortgages and loans. Their savings and checking accounts are almost worthless.



Thanks. I forgot about that. I had mentioned it to my brother this summer.
You're welcome and I'm happy to help. This is not information that Banks volunteer. Also their employees can give out incorrect information. I actually had one employee from Greenpoint Mortgage advise me that my late mother could not have transferred title to her Living Trust because the bank wouldn't have allowed it. <rolls eyes> But my favorite was a later call from the same bank trying to encourage me to formally assume the loan "so that I could get credit for it on my credit report and deduct the interest". Yeah, right! I want to have subprime loan in my name and have even more debt added to my debt ratio. I sold that property about a year later after it went through an expedited probate (six months!) in CA.

I had no problem deducting the interest on the loan for the other property during the 8 years it was titled in my Trust's name. I don't know if these bank employees were just ignorant or coached to give misleading info but I wasn't pleased.

Good luck with your situation.