What Happens If A Borrower Passes Away?
What do you do when the borrower in a mortgage you placed passes away?
Imagine you get a phone call and find out that one of your borrowers has died. What are your next steps? What needs to be done? If your deal was placed with an MIC or alternative lender, here are some tips if you find yourself in the situation where a borrower passes away:
- Communicate: first and foremost, let the lender know what has happened as soon as possible
- Payments: Confirm that payments can continue to be made from the borrower’s account or whether alternative payment arrangements have been made.
- Property Taxes: Assure the lender that the taxes will be paid, especially if it’s close to when taxes are due.
- Fire Insurance: This is important to address if the property will be left vacant. It will need to be made sure that the terms of the policy with regard to maintenance and regular property inspections are followed.
- Strata Fees: If the property is a condo or strata-titled, confirm for the lender that the monthly fees will continue to be made.
- Renewal: If it’s close to renewal time, ask the lender what their policy is. If they can’t provide a written renewal, it may be possible to make another arrangement. Often a month-to-month arrangement is satisfactory as long as payments are made.
- Exit: Confirm for the lender what the exit plan is.
It’s important to bear in mind that these tips may be different than what you do for a bank lender.
But if the MIC lender knows that these points have all been addressed satisfactorily, it’s best for all parties involved. This way the survivors of the deceased borrower will have been given peace of mind. And not to mention the time and flexibility they will need to wind up the estate in an orderly fashion.
