CFPB Clarifies Inherited Mortgage Rules
The CFPB issued an interpretive rule Tuesday regarding surviving family members who acquire property titles after the owner dies. If necessary, the CFPB said the individual taking over the mortgage could be considered for a loan workout to avoid foreclosure and keep the home.
“When a borrower dies, the name of the borrower’s heir generally may be added to the mortgage without triggering the Bureau’s Ability-to-Repay rule,” the CFPB said of the interpretative rule.
“Losing a loved one should not mean also losing your home. Today’s interpretive rule makes it clear that when family members inherit property, they can take over the mortgage without jumping through unnecessary hoops,” said CFPB Director Richard Cordray. “This gives heirs an opportunity to work with the lender to pay off the loan or seek a loan modification.”
The National Consumer Law Center praised the CFPB’s announcement as a crucial step toward assisting widows and other heirs seeking to keep their family home after a tragic loss.
“The rule clarifies that the requirements for new loans do not apply to these homeowners, and that these homeowners also have the right to receive routine notices about the loan,” said Alys Cohen, staff attorney at the NCLC’s Washington office.
“We hope the CFPB will go further and build on its October 2013 guidance to make clear that mortgage companies should accept loan modification requests from successors’-in-interest before requiring that person to assume the debt,” Cohen added.