What to do if my elderly parents have no credit history of ever paying their mortgage?

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What to do if my elderly parents have no credit history of ever paying their mortgage?

My elder parents assumed a mortgage in 1991 from owners, from what public records show. My dad has PD with dementia and my mother does not remember the transaction details. Anyway, fast forward almost 30 years later and they paid off their mortgage. The bank has been sending them the bill all these years and my

parents have been paying. Great. Well when we tried to access their equity the bank said my parents have no credit history and there is no evidence of them ever having paid off a mortgage. Now, when I checked the records, the bank sent my parents the letter of mortgage successfully paid off but the name on the public recorded letter was that of the previous owners? Now is it possible that even though my parents have been sending the payments to banks, the previous owners were receiving the credit for payments? The only record that my parents bought that house is a warranty deed and assumption of mortgage, etc. It gets confusing and unsure of how to help my parents at this point since so much time has passed.

Asked on June 1, 2019 under Real Estate Law, Florida

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

There may be nothing to do. You write that they had an "assumption of mortgage," but if so, was it approved by the bank/lender? While we don't have a copy of the mortgage in front of us to check what is says, almost always, a mortgage from a bank can not be assumed without the bank's approval. (That is, it contains some "no assignment" clause or provision.)  Therefore, an assumption without the bank's approval (which would have also then switched the mortgage to your parent's name) would not be valid--i.e. they never actually assumed the mortgage. Rather, they were in fact paying off someone else's mortgage. If that was the case, you cannot retroactively, after the fact, put an already-paid-off mortgage in their name: they will not get credit for it.
You may have to cosign with them if they want to tap the equity, so the bank can rely on your credit history. But if you do that, *you* will become liable for the mortgage if not paid. Think very carefully before doing this.


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