Mortgage Consolidation Obligations in the event of Death

My dad had 2 homes; 1 is a completely paid off holiday home and the other is his primary residence that has a mortgage. He is considering a mortgage reversal to supplement his income as he doesn’t work much being 70. If he were to pass away with a mortagage loan, could the other property be used to help pay this off? I’m his only son and he has said that the free and clear property is in my name which I take to mean I’m set to inherit it. I would like to live there.

Asked on December 23, 2018 under Real Estate Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

There is no obligation to consolidate mortgages, so property 1 would only be affected by property 2's mortgage if when he took out the reverse mortgage, he  agreed to use property 1 as collateral for (i.e. to help secure) the loan on property 2. If he did that, then when he passes away, the lender could look to foreclose on both properties if the remaining balance on property 2's loan is not paid. But if he did not "cross collateralize" or otherwise use property 1 to secure the property 2 loan, then while propety 2 could be foreclosed upon, property one would not be.


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