What to do if my father passed away and left a personal loan solely in his name but used his and my mother’s house for collateral?

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What to do if my father passed away and left a personal loan solely in his name but used his and my mother’s house for collateral?

My mother has since gone through the probate process and is now the only name on the deed to the house. She is not a co-borrower on this loan but did sign to give him permission to use the house as collateral. The bank is telling her that she is responsible for paying this loan off. Since she is not a co-borrower, is she responsible for paying?

Asked on July 5, 2013 under Estate Planning, Ohio

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Although your mother is not technically a co-borrower, since she consented to the use of her home as collateral for the loan, she is practically speaking responsible for repayment. The fact is that if she doesn't pay the loan then it will go into default. At that point, the lender can sue and obtain a judgement. Once such a judgement is granted, then the lender will have the legal right to "attach" (i.e. seize) the collateral.

Your mother should have an attorney review all documents, etc. related to the loan. They can more fully apprise her of her rights.


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