What to do if a lender discouraged us from taking out life insurance regarding a home equity loan?

UPDATED: Sep 30, 2022

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What to do if a lender discouraged us from taking out life insurance regarding a home equity loan?

My mother passed away last year and left a small home equity loan on the house that she, my dad and my family live in. My dad and I are joint tenants and we both on the property. When we took out the loan 9 years ago, we asked the mortgager if my mother should take out life insurance on the loan. The officer said no, it was not necessary because I would be paying the loan, not her. I think this was a huge error but when we pressed her on it, she refused saying,

Asked on May 10, 2016 under Real Estate Law, Minnesota


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

No, there is nothing you can do. The lender may have "discouraged" you from taking out the life insurance, but she did not stop you: you had the right to ignore her advice and take out any insurance you wanted. Since it was your choice to follow her advice, and because the mortgagor is not a financial advisor with a fiduciary duty to you, the lender is not liable for the advice their person gave or your voluntary choice to not take out insurance.
In addition, the relevant statutes of limitation, or time periods within which you must sue, if you are going to sue, in your state for a case like this would be six years or less, not eight years--so even if you might have otherwise had a case, if the loan was taken out eight years ago, it would be too late to take action.
You may need to look to selling the home to get out from under the debt.

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.

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