Spouse dies; wife not on the title or mortgage loan; what happens?

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A friend of mine just lost her husband due to heart attack; he purchased home in 2007 in his name and wife was not on title or mortgage loan; they have been married for 5 years and live in Arizona which I believe is a community property state.

The home now has negative equity compared to oustanding balance and loan is an adjustable loan.

Can Wells Fargo (mortgage) come after her for home balance?

She is thinking about letting home go into foreclosure due to negative equity and that and she cant afford it; she was also thinking about doing a loan modification, yet not sure if that can be done seeing that her name is not on the loans or title??

  1. Reply
    January 30, 2011 at 1:07 am

    If your friend plan to keep the home then she would have to go through probate. During the probate procedure the probate judge will sign a document authorizing her to have ownership of the property that must be presented to the county court clerk in which the property is located. Based on this document issued and signed by the probate judge the county recorder clerk will then prepare a title deed in the name of your friend.

    If she plan to do a loan modification she would have to see if the lender would approve her application to assume the existing mortgage.
    If she decide to go this route she would have to go through probate, having the property legally transferred to her name, therefore will be able to prove to the lender that she is the legal owner of the property.

    If she does not want the property for financial reason, and not planning to make any of the monthly mortgage payments, she simply have to allow the foreclosure procedures to start and end. She has nothing to lose as she is not on the mortgage.

    If there are other assets she should immediately protect them by transferring them to an account in her name only and closing the accounts that are in she and her husband’s name.

    For legal and tax matters you should always contact your attorney and tax consultant.

    I hope this has been of some benefit to you, good luck.

    “FIGHT ON”

  2. Reply
    Glenn S
    January 30, 2011 at 1:42 am

    Did the husband have a will? Was the property in a trust? If it was in a trust the property won’t have to be probated. If the husband was intestate, (died without a will) a judge will have to decide who inherits the property. Since they have been married for such a short time and her name was left off the title and loan I’d bet that there is a pre-nuptial agreement involved. His family members (children) may very well have a claim to the property, not the wife. If that is the case, the property may not be considered community property, but the sole and separate property of the deceased. If there is a trust or will there is a very good chance that the wife is not even the trustee of the trust or the executrix of the will.

    After saying all that, it probably doesn’t matter since more money is owed against the property than it is worth. She should probably let the home be foreclosed on, since she is not on the loan or title in won’t effect her credit. I’d suggest for her live there as long as possible without making any payments until the lender makes her leave. I’d bet that would be at least 6 months.

    Trying to transfer any assets of the husband outside a trust into her name (without probate court approval) after his death is illegal and she could be charged with a felony for doing so….especially if other family members, like his children, are involved.

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