My son died, no life insurance. Lender trying to foreclose on wife?

Question

My son was killed in a car accident. He had no life insurance. Only PMI on mortgage. Lender is trying to foreclose on his wife who has a 5 month old baby. What can she do if anything to save her home?

I thank everyone for their help. Some answers were hard to read because they mention that my son was irresponsible having no life insurance. I wanted to add that my son had just started his own business, insurance was ordered, the paperwork for his signature arrived 3 days after his death. His wife tried to get a job but child care cost more than she could make. I live in a different state and cannot help with that. I gave them every penny I had to get the business started. There is no money left. The business has no money to give back since it was all put into start up costs. Some supplies are left and will be sold but it won't make enough to carry her through. She has decided to put the house up for sale and move in with her mother for now. It was a single car accident at 12 midnight, he fell asleep at the wheel on his way home after being out working since 5 am. Thank you all for your responses and your kind words.

Answer 1

I worked at a mortgage company for a while developing their software for default management (everything past collections, like foreclosure, etc.). Different companies will have different policies, but I can tell you that (at least for the one I worked for) they don't want you to lose your home because they actually lose money when it goes to REO (when a bank formally takes back the property). What I would do is call their customer service and request to speak to a "home retention" or "loss mitigation" (or something like that, they have different names in different companies) specialist and see what they suggest.

The stupid thing is, a lot of times they can't do anything until you've actually defaulted and are in the midst of losing your home, then the default management team steps in and takes steps to put you on a plan and works with you to see what they can do to save your home. Dumb. Dumb. Dumb. But that's the way it is.

Then you really only have 2 options:
1) Go through that process. They can't kick you out of your home for a long long LONG time... and even when they pressure you and pressure you, stay put. They will eventually offer you "cash for keys" which is basically them paying you to leave (you can negotiate a dollar amount that you think is fair, but go for at least 2K, or enough to move into an apt for a couple of months, more if the property is worth a good amount).
2) Go through that process and get past collections (3 months for most mortgage companies, 2 months for WaMu) then you get to speak to ppl who care about you keeping your home, and set up a plan with them. If there's a way, they will help you find it.

I wish you the best of luck and hope that this helps.

Answer 2

Without finding a source for the funds, she really is out of luck. She should be receiving SS survivor benefits for the child. Perhaps she could take in a roommate to help pay the mortgage? There may be some government assistance available.

If money is the issue and she is working, she should look into the WIC (Women, Infants, and Children) Program. It will at least help her purchase food, formula, etc to make sure that the child has what it needs to grow up healthy. That will take a bit of hte burden off of her.

If you can afford to help her, she'll need everything you can provide. Typically her only choice at this point is to try and sell and start ove.

Answer 3

I take it that since there was no mention of litigation or an award in the case that the accident involved only a single-car. Since he had no insurance policy coverage that adds even more grief to the situation. The best thing I could suggest in a case like this is to get the media involved. Notify the closest TV station and speak with one of their reporters. Perhaps they will pick up the story and publicize it to embarrass the lender to back-off as well as get the attention of someone (or a group of people) to help your daughter-in-law remedy her situation.

Answer 4

I'm sorry but I believe the PMI only protects the lender's interest in the loan. It doesn't pay off the loan for the survivor. I don't know what she can do, but it would be worth talking to an attorney. Call the local BAR Association and ask for a free consultation with an attorney who handles real estate issues. That would be my suggestion.

Answer 5

If she is not paying the mortgage....and is incapable of paying the mortgage....I'm afraid there is nothing that she can do but give up the house.

The lender loaned the couple the money based on getting paid for their investment....and it is THEIR investment and THEIR house, they are just allowing them to live there while you pay them back for it.

It's a sad situation and feel sorry for your daughter-in-law, but why should the lender be penalized that your son was so financially irresponsible? THAT would be unfair.

Answer 6

Unfortunately, if she hasn't made the payments, they have the right to foreclose. To save her credit history, she should put the house up for sale now. Don't wait until the forclosure. Help her rent a place for awhile until she gets on her feet. Rebuilding credit history is very difficult. Most lending institutions hear all the saddness stories. This is the time to fight for credit history she has now to be able to use it in the future. Good Luck! And give her a hug from me.

Answer 7

I don't think there is much you can do, The lender is entitled to their monthly payments, if it isn't paid then forecloser is the only option. the 5 month old baby has nothing to do with anything. Why no life insurance?? Or you can make the payments for her. Or she can get a job.

Answer 8

well, nothing. It's their right to foreclose if the mortgage isn't being paid.

I assume she's filed for social security benefits for the baby (surviving minor) and herself (surviving widow)? And that any payments due from the auto insurance carrier have been collected? And if there's any chance the trip was work related, a workers comp claim has been filed?

Answer 9

To save her home, she will have to pay the arrears and costs and keep current on the payments.

What is she using her paycheck for if she isn't paying the mortgage?

Is there going to be a settlement from the accident? Are they eligible for survivors benefits?

Can she sell the home and find a cheaper place to live?

Answer 10

Personally I don't know of anything.But for this situation I would call an attorney and see what they say. Most of them will give some advice over the phone. Good Luck and you have my deepest sympathy.