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    Norm54's Avatar
    Norm54 Posts: 1, Reputation: 1
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    #1

    Oct 13, 2014, 12:49 PM
    HELOC owner passed away
    My mother passed away 18 months ago. She has a HELOC which my sister and I have been paying on since her death. Several months ago we got the home quick deeded into our names having our 3 siblings sign off on it. Mom died broke and according to the estate lawyer, the bank would have to sue all 5 of us to get their money, since all 5 of us inherited the house at the time of moms death. Is this true or would the bank forgive the debt? We live in Pgh, Pa.
    tickle's Avatar
    tickle Posts: 23,796, Reputation: 2674
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    #2

    Oct 13, 2014, 01:05 PM
    She had a home equity loan, and no, the bank is not going to forgive the debt. They will want their money, so they will take the house.

    HELOC, or home equity line of credit.
    LisaB4657's Avatar
    LisaB4657 Posts: 3,662, Reputation: 534
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    #3

    Oct 13, 2014, 01:20 PM
    If there was a heloc that means that the bank holds a mortgage on the house. Having the house quit claimed to you and your sister will not avoid that mortgage. If you stop making payments on the loan then the bank can foreclose on the property, sell the house for the amount of the remaining balance on the loan and you and your sister will be left with nothing. I suggest that you and your sister either continue making the payments or refinance the loan into a loan in your own names. However if you can continue making the payments on the heloc loan that would probably be best, since the interest on a heloc is typically lower than a regular first mortgage.
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
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    #4

    Oct 14, 2014, 06:12 AM
    As Lisa notes, a HELOC is a mortgage. A mortgage represents a lien on the property. Basically this means the bank can seize the property to repay the loan. In fact, there may be a clause in the mortgage that give the lender the right to call the loan if the property changes hands. So by filing a quit (not quick) claim deed. You may have given the lender the ability to demand payment in full or foreclose.

    I'm not sure whether they can go after all 5 siblings but its possible, since they signed off on the quit claim deed without consulting or informing the lender. I'm really surprised the estate attorney did not explain this.

    Bottom line is if you don't pay the loan, the lender can foreclose. Whether they will sue all 5 siblings or just the deeded owners will probably depend on whether the value of the house is enough to cover the balance of the loan.
    LisaB4657's Avatar
    LisaB4657 Posts: 3,662, Reputation: 534
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    #5

    Oct 14, 2014, 06:21 AM
    None of the siblings can be sued by the bank unless they sold their shares of the property and received payment for them. Then the bank would be limited to suing them for the amounts of the payments they received for their shares. That is because the siblings are not personally liable for the repayment of the heloc.

    With regard to the current owners, they are not personally liable for repayment of the heloc either. The bank's recovery is limited to whatever they can get for sale of the property at auction after foreclosure.
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,301, Reputation: 7692
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    #6

    Oct 14, 2014, 06:21 AM
    Yes, the bank will merely foreclose on the house, and if there is any remaining debt, sue. Banks have attorneys and lawsuits are just an every day thing for them..
    AK lawyer's Avatar
    AK lawyer Posts: 12,592, Reputation: 977
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    #7

    Oct 14, 2014, 07:12 AM
    Quote Originally Posted by Fr Chuck
    Yes, the bank will merely foreclose on the house, and if there is any remaining debt, sue. Banks have attorneys and lawsuits are just an every day thing for them..
    As Lisa indicated, it is unlikely that they can sue OP or his siblings for a deficiency.

    What I am wondering is how the siblings managed to transfer title to "our names" (presumably OP and another sibling). I'm guessing title was transferred to the 5 siblings prior to the mother's death, but this isn't clear.
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