What happens when a cosigner on a mortgage passes away?

Question

I am asking because my mom passed away and now I am being told that both me and my sister are part owners of this property. Is it true and is there a way to get out of this?

Answer 1

It's a bit complicated. There is a difference between cosigner and co-owner. Your mother could very well have cosigned for a mortgage but not be named on the deed, though it's not likely.

Because you say you've been told you are part owners of the property, it sounds like your mother was part owner as well as cosigner. If you and your sister are named in her will as heirs, her interest in the property would pass to you. If she was half owner, you and your sister would receive a half interest.

Here's where it gets complicated. Cosign generally means you are promising to pay if the person you signed for doesn't pay. You didn't say whether or not your mother was paying anything toward the mortgage. If she was, then she really isn't a cosigner but a co-mortgagor. If the other person needs that money your mother was paying to keep the mortgage paid, you could have a problem. You are not obligated to pay the debt, your mother's estate is. The property will have to either be sold or the other owner refinance it to buy out your half interest and pay off the original mortgage. That would eliminate that debt from your mother's estate and you would receive what was left over.

If the other owner can't afford to refinance the property would have to be sold, the mortgage paid off, and you would get your half interest. But, if there is no equity in the property, or if the other owner decides to stop paying altogether, your mother's estate would be on the hook for the entire debt. You can execute a quit-claim deed to give up your interest in the property, but there's really no reason to do that unless there is no equity.

You really need a good estate attorney to help you with this.

Answer 2

Were you a cosigner on this property or was your mother. I'm confused. Regardless, if you and your sister were on the loan/mortgage to begin with, then you will both be responsible for making the payments until it is sold or insurance benefits pay it off, if there are any.

However, if you were not initially on the mortgage and just inherited the property, you did not inherit the additional responsibility of the payments, because you didn't originally sign the note. In this case, if there is equity, you'll want to make payments until it sells anyway to collect your share when it does close. If there is no equity, you can do nothing, and let the bank take possession.

Good luck.

Answer 3

Your mother was part owner as a cosigner she was responsible if you didn't make the payment. When she passed away her interest in the property passed to her heirs, you and your sister. If your sister will sign a "quit claim" deed that should do it. Then get the property deed put in your name.

Answer 4

The remaing cosigners are responsible for making the payments. When the property is sold, the loan will be paid off from the proceeds.