How to Deal With a Foreclosure as an Estate Executor

By Anna Assad

You have a great variety of responsibilities as the court-appointed executor of an estate, including property management. If property of the deceased is in foreclosure, you must deal with the matter as soon as possible as you have a legal obligation to pay estate creditors and protect the deceased's assets. A lender is more willing to work with you if you act quickly, before the lender incurs more legal costs related to the foreclosure action.

Step 1

Contact the lender in writing. Use certified mail, return receipt requested, so you have proof of contact. Include a copy of your court appointment as executor, such as the letters testamentary, and proof of the deceased's death, such as a copy of the death certificate. Request a detailed loan statement. The statement should show the total balance on the mortgage and how far behind the payments are. Request a copy of the payment history, covering a period from at least two or three months before the deceased died until the present. For example, if the deceased died three months ago, ask for the payment history for the last six months. Request a copy of the loan documents.

Step 2

Review the payment history and account statement. Note the amount the estate would need to pay to make the loan current and total principal balance due. Review the loan documents to make sure the figures and other information are accurate.

Protect your loved ones. Start My Estate Plan

Step 3

Examine the condition of the property. Write down any major repairs needed.

Step 4

Research market values and recent selling prices for properties in the area with the same features. Contact real estate agents who work in the area. Ask for a list of recent listings and sale prices.

Step 5

Use the recent listings and sales prices to estimate the property's value. Refer to your repair list. Major repairs needed, such as a new roof, eat into the home's value. Contact local contractors for major repair estimates if you're uncertain of repair costs. Compare the value you calculate to the amount owed on the mortgage. If the home is "underwater," or worth less than the mortgage, the property may be a worthless asset.

Step 6

Review the estate's other assets, property and debts. Determine whether the estate has enough money to pay the past due amount on the mortgage after other creditors with a higher priority are paid. Review your state's laws regarding creditor priority in probate. Include the amount of any homestead exemptions or allowances state law gives to deceased's heirs. In some states, the deceased's spouse or children are entitled to property or a specific amount of money before creditors are paid.

Step 7

Pay the past due balance on the loan if possible. Ask the lender to send you proof of the cancellation of the foreclosure action and proof of payment. Make a copy of the payment, such as a check from the estate's bank account. Send payment and the request by certified mail, return receipt requested. Keep the proof of payment from the lender and check copy in a safe place. You will need the papers when you file your final accounting in court later.

Step 8

Contact a real estate agent if the estate can't pay the past due amount but the home is worth more than the loan balance. The agent will list the home for sale and contact the lender for you. Once the home is sold, any proceeds left after the lender is paid belong to the estate.

Step 9

Contact a real estate agent if the home isn't worth much more than the loan balance. You may be able to sell the home in a short sale instead. The lender accepts less money than due on the mortgage in a short sale. The agent will handle the paperwork for you.

Step 10

Speak to an attorney if you can't sell or save the home. You may have to let the lender foreclose if the home is underwater or the estate can't sell the home or pay the past due balance. Keep proof of all your attempts to sell the home, copies of all correspondence with the lender and loan account statements. You may need the proof to show the probate court you tried but were unable to save the home.

Protect your loved ones. Start My Estate Plan
How to Settle an Estate if There Is a Lien in North Carolina


Related articles

Checklist for the Executor of a Will

Don’t become overwhelmed by the tasks involved in probating a will. You can often minimize the stress associated with performing your executor duties by staying organized and creating a checklist. Follow your checklist to confirm that you have performed each step of the probate process. However, in some cases it may be a good idea to retain a professional to assist you with your duties.

What Happens if a Person with Power of Attorney Pays the Bills Before Probate?

A power of attorney is a legal document that authorizes another person to handle your affairs on your behalf. This person is called your agent or attorney-in-fact. A general power of attorney is broad and provides extensive powers to your agent including the power to act in financial and legal matters. A special power of attorney allows you to give only specific powers to your agent. Depending on your situation, you may want the power of attorney to take effect immediately, or you may want it to take effect when you become unable to handle your finances yourself. All powers of attorney, however, expire when the person who signed it dies; the agent loses authority at that point.

Tips for an Executor of a Will

As the executor of a will, you are responsible for carrying out the instructions left in the will, according to FindLaw. Your duties include paying the last debts of the estate, distributing assets to the beneficiaries and if necessary defending the legality of the will in court, according to the American Bar Association. Following a few tips for an executor of a will can help make your work easier.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help. Wills & Trusts

Related articles

How to File a Claim Against the Estate of a Deceased

If a person dies while owing you money, you may file a claim against the deceased's estate in probate court. Filing a ...

How to File for Bankruptcy After a House Is Sold at a Sheriff's Sale

Losing your home to foreclosure through a sheriff's sale may not end your financial difficulties with your mortgage ...

What Happens When a Bank Charges Off Your HELOC After a Chapter 7 Discharge?

If you file for a chapter 7 bankruptcy, you are asking a federal court to protect you from collection actions and ...

Legal Duties of the Named Executor of the Will

Executing a will might take a few months to a few years, depending on the complexity of the estate. Executors are ...

Browse by category
Ready to Begin? GET STARTED