What Happens to a Mortgage When the Mortgagee Dies?

by Tony Guerra Google
    Lender foreclosure may occur when a mortgage borrower dies.

    Lender foreclosure may occur when a mortgage borrower dies.

    Homeowners with mortgages often have those mortgages for decades. Unfortunately, in some cases it's inevitable that a homeowner with a mortgage will die before that mortgage is fully repaid. Mortgages are secured by their properties, though, and their terms often specifically address what happens should the person with the mortgage die. Typically, lenders holding mortgages in which the property owners paying on them die have several options, including even loan foreclosure.

    Mortgage After Death

    Mortgage loans are secured by the properties purchased with them. Almost every mortgage loan contains a promissory note that provides a specific claim to the property securing that loan. When a property owner with a mortgage dies, the promissory note gives the lender the right to immediate loan repayment. If a deceased person's estate isn't able to fully repay that person's mortgage loan the lender can instead move to sell the mortgaged property for repayment.

    Bequeathing Mortgaged Properties

    Often, deceased persons with mortgages bequeath their properties to inheritors. When a mortgaged property is inherited the lender might choose to wait for the inheritor to decide what to do with the property. Inheritors of mortgaged properties often must decide if they'll keep or sell those homes to satisfy mortgage loans, estate taxes and the like. Also, relatives inheriting mortgaged homes can sometimes keep their deceased relatives' original mortgages as is if they intend to live in those homes.

    Mortgage Payments

    States require that a deceased person's estate make debt payments until final estate settlement. For example, a deceased person's estate might make mortgage payments on property going to inheritors in order to avoid possible lender foreclosure. Estate executors are bound by law, too, to inform creditors of the estate what will be done to satisfy any estate debts, including mortgages. If a deceased person's mortgaged property isn't going to others, the lender normally immediately forecloses it.


    Most mortgages feature due-on-sale clauses that are used to demand full repayment upon sale or transfer of mortgaged properties. Due-on-sale clauses and mortgage promissory notes are the two major instruments used by lenders to demand mortgage repayment upon death. However, a deceased person's estate doesn't have to drain itself of all assets to pay off a mortgage loan. Sometimes, though, a deceased person's mortgage lender can foreclose and then sue the estate for any mortgage repayment shortfalls or balance deficiencies.

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