Wednesday, March 22, 2017

Lender Accepts Mortgage Payments ($8,500) From Woman For 10 Months On Her Recently-Deceased Dad's Home, Then Invokes Death Default Clause To Foreclose Anyway

In Powhatan County, Virginia, WTVR-TV Channel 6 reports:
  • A family home was sold to the highest bidder Friday [March 10]; it was an auction overshadowed by tears. Peggy Stroud wept as a bidder bought the home she grew up in on Urbine Road.

    Stroud said the home is the place where her mother took her last breath, and her father was shot to death on the porch two years ago.

    For months after his death, Stroud says she paid the bank her dad's mortgage, nearly $8,500 total. She was stunned to learn that all of those payments still did not stop a foreclosure.

    "The mortgage lady said there was a death default on the promissory note he signed and that means when he died the entire balance was due upon his death,” Stroud said.

    No one told me that for about 10 months after he passed away,” she continued. “They accepted every payment.”

    Several local attorneys said that the promissory note her father signed decades ago, is legally binding, and that the bank was within its right to foreclose on the property.

    "It's hard for me,” Stroud said. “Legal and moral are two different things. I think ethically that at least I deserve my money back.” “If you are not going to work with me to save the house, the only thing I have left of my parents, then give me my money back," she said.

    Local real estate attorney Shane Frick, who is not affiliated with this case, said death default provisions are not that common, but they do exist. "Depending on the circumstances, it certainly can mean they can foreclose on you,” Frick said.

    He said it is a default under the mortgage and that continued payment doesn't mean the clause can be stopped. “Again, each situation is different," Frick explained.

    Stroud said the death default clause was something she had never heard of, and had no idea to ask about. Now she hopes her story will be an eye-opener for others.

    "If you inherit property and it still has a lien or a mortgage, absolutely ask if there's a death default on the promissory note," Stroud said.

    That something Frick says is sound advice, whether you are buying or inheriting property. "It's an important question to ask,” Frick explained. “You really want to do your due diligence so you fully understand what you're getting yourself into.”

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