Read on to learn what steps need to be taken in order to ensure the home and loan are handled properly.
Terms to Know
Estate
An estate includes all assets and liabilities left behind, such as:
- The mortgaged property
- Outstanding mortgage debt
- Other financial obligations
The estate is the legal entity responsible for resolving the mortgage—whether by continuing payments, selling the property, or negotiating a payoff.
Executor or Administrator
When a borrower passes away, the mortgage servicer will only work with someone who has legal authority over the estate. This person is typically referred to as an executor or administrator, depending on whether the deceased left a will.
- Executor: Appointed in the deceased’s will to carry out their final wishes, including managing assets, paying debts, and distributing property.
- Administrator: Appointed by the court when there is no will. They perform similar duties to an executor but follow state laws for asset distribution.
The executor or administrator should serve as the point of contact for the servicer and must provide documentation proving their legal authority (such as letters testamentary or court appointment).
Steps to Take If a Borrower Passes Away
1. Notify Newrez Immediately
The first and most critical step is to inform the mortgage servicer of the borrower’s passing. This should be done by the executor or administrator of the estate. When contacting the servicer, be prepared to provide:
- A copy of the death certificate
- Legal documentation proving authority to act on behalf of the estate (e.g., letters testamentary or court appointment)
2. Determine Who Inherits the Property
If there’s a co-borrower or surviving spouse, they may continue making payments and retain ownership. If not, the property typically passes to heirs via a will or probate.
The heir may:
- Assume the mortgage (if they receive lender approval)
- Sell the property to pay off the loan
- Refinance the mortgage in their own name
3. Understand Successor in Interest Rights
Heirs or surviving spouses may qualify as a “successor in interest,” a designation that grants them rights to receive loan information and potentially assume the mortgage. Under Consumer Financial Protection Bureau® (CFPB) rules, servicers are required to recognize and assist successors appropriately.
Requirements vary by state, so it’s important to consult with the servicer or legal counsel. For more information, contact us at 866-317-2347.
4. Probate and Estate Management
Probate is the legal process of settling a deceased person’s estate. It involves:
- Validating the will (if one exists)
- Appointing a legal representative (executor or administrator)
- Distributing assets and settling debts
If the borrower died without a will, the court will appoint an administrator. Mortgage servicers will only work with someone who has legal authority over the estate.
5. Continue Payments or Request Assistance
To avoid default, mortgage payments must continue—even after the borrower’s death. If the estate or heirs are unable to make payments, we may offer loss mitigation options such as loan modification or alternate repayment plans. Learn more here.
Open communication is critical to exploring available solutions and protecting the property from foreclosure.
The Bottom Line
We understand that times like these can be difficult, and dealing with the deceased’s estate may add stress on top of that. Know that we’re here to answer your questions and guide you through the process as best we can. Don’t hesitate to reach out.
