Dealing With the House

Jason's his grandmother died two years ago and left a house. The house is worth about $95,000 and had an interest-only mortgage on it. The bank hasn't foreclosed. What would Dave do?

QUESTION: Jason in Portland is calling because his grandmother died two years ago and left a house. The house is worth about $95,000 and had an interest-only mortgage on it for about the same amount. The bank hasn’t foreclosed on the house even though it’s been sitting empty all this time. What would Dave do?

ANSWER: It doesn’t sound like there is any money. Here is the deal: When you pass away, what you own stands good for what you owe in total. What she owned versus what she owed equals zero.

I would just let it go. If the bank doesn’t foreclose on it, that’s their problem. Take the odds and ends out of it that you want as keepsakes, put boards over the windows and walk away. Call it a wash. Your mom is on the deed but not the note. It’s just going to be an estate, and then your mom, who is executor of the estate, needs to send a formal letter, and her attorney should be able to advise her on that.

The letter should say that they are surrendering the property and have secured it by boarding it up and the bank needs to foreclose as quickly as possible. It is in their best interest to do so. Get them a copy of the death certificate. The estate has no assets.

Now, if there is a $10,000 diamond ring and someone walked off with that and there is knowledge of that and they can figure out that you did that, then the mortgage company can come after your mom as the executor for mishandling the estate. It’s kind of emotional to do, but I would just walk away.