HELOC obligation on inherited home

[aeiou2020]

Hello. My father passed away a few years ago, and I inherited his house. Unfortunately, it also came with an existing HELOC with a sizeable balance. Soon after they were notified, the lender asked me to refinance the loan, but at a much higher rate, so I resisted. They then attempted to enforce the due-on-sale clause and sent a letter of intent to foreclose. After I researched and presented to them the Garn-St Germain Depository Institutions Act of 1982 law, they allowed me to continue to make payments on the existing loan instead. The estate has been closed now for a couple years and all creditors had their chance to collect their debt. The HELOC is still in my father's name. Am I obligated to pay this HELOC off when I sell the house? Thank you.

What is the name of your state (only U.S. law)? MO

 

[LdiJ]

Hello. My father passed away a few years ago, and I inherited his house. Unfortunately, it also came with an existing HELOC with a sizeable balance. Soon after they were notified, the lender asked me to refinance the loan, but at a much higher rate, so I resisted. They then attempted to enforce the due-on-sale clause and sent a letter of intent to foreclose. After I researched and presented to them the Garn-St Germain Depository Institutions Act of 1982 law, they allowed me to continue to make payments on the existing loan instead. The estate has been closed now for a couple years and all creditors had their chance to collect their debt. The HELOC is still in my father's name. Am I obligated to pay this HELOC off when I sell the house? Thank you.

What is the name of your state (only U.S. law)? MO

Yes you are.

 

[justalayman]

Hello. My father passed away a few years ago, and I inherited his house. Unfortunately, it also came with an existing HELOC with a sizeable balance. Soon after they were notified, the lender asked me to refinance the loan, but at a much higher rate, so I resisted. They then attempted to enforce the due-on-sale clause and sent a letter of intent to foreclose. After I researched and presented to them the Garn-St Germain Depository Institutions Act of 1982 law, they allowed me to continue to make payments on the existing loan instead. The estate has been closed now for a couple years and all creditors had their chance to collect their debt. The HELOC is still in my father's name. Am I obligated to pay this HELOC off when I sell the house? Thank you.

What is the name of your state (only U.S. law)? MO

You had a couple choices when the estate was presented for probate. One would have been for the estate to pay off the HELOC and distribute the house free and clear. If there were not enough assets to do that, you had a couple other choices: sell the house to pay off estate debts or accept the house with the lien in place. You chose the latter. You can either pay the HELOC as scheduled or in full or the lender can foreclose on the property and sell it to pay the debt owed to them. Your choice again.

as to selling it without paying the HELOC:

if you can find a buyer willing to accept the debt and the lender will accept the reassignment to the buyer, no, you do not have to pay the debt. Otherwise you are not going to sell the house without paying off the HELOC. At closing, the creditor will be given a check to pay the debt whether you want it to go that way or not.