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


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. 

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.