What to do if my mom is to inherit a house as per the terms of a Trust but the mortgage is far greater than the value of the house?

If my mom accepts the house from the Trust and can’t pay the loan, can the bank holding the loan go after my mom or is the bank’s only recourse is taking the decedent’s house?

Asked on November 25, 2013 under Estate Planning, California

Answers:

Nathan Wagner / Law Office of Nathan Wagner

Answered 7 years ago | Contributor

The bank's options are different in different states. In California, the bank's only recourse is to foreclose on the property. They cannot get what's called a deficiency judgment against your mom personally, assuming that the mortgage loan was used to purchase the property or was used to refinance that original loan. 


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