What to do when a LoanCare account holder dies

A successor in interest is someone who receives an ownership interest in the property — for example a relative who inherits the home — without necessarily being on the original loan. Under 12 CFR 1024.31 that includes a transfer by devise, descent, or operation of law on the death of a joint tenant, a transfer to a relative resulting from the death of a borrower, and a transfer where the spouse or children of the borrower become an owner. Once a servicer like LoanCare confirms you, it must treat you as a "borrower" for most servicing purposes: you can obtain information about the loan and apply for loss mitigation. Critically, 12 CFR 1024.32(c)(1)(ii) requires the confirmation notice to state that unless you assume the mortgage obligation under state law, you are NOT liable for the debt and cannot be required to use your own assets to pay it — the lender keeps only its security interest and right to foreclose on the property. A written request under 12 CFR 1024.36(i) that names the borrower you received your interest from and identifies the loan obliges LoanCare to answer in writing with the documents it requires and a telephone number for help.

Usually, and this is the most valuable thing to know about a mortgage in an estate. Under the Garn-St. Germain Depository Institutions Act (12 U.S.C. 1701j-3(d)), a lender may not enforce a due-on-sale clause on a transfer to a relative resulting from the death of a borrower, on a transfer where the spouse or children of the borrower become an owner, on a transfer by devise or descent on the death of a joint tenant, or on a transfer into the borrower's inter vivos trust where the borrower remains a beneficiary. The implementing rule adds a condition the statute leaves out: 12 CFR 191.5(b)(1)(v) applies the relative and spouse/children exemptions to "a transfer, in which the transferee is a person who occupies or will occupy the property," and 191.5(b)(1)(vi) requires the borrower to remain the beneficiary AND occupant for the trust exemption. Combined with the Regulation X successor-in-interest rules, an inheriting family member who lives in the home can generally keep the existing loan and its existing rate instead of refinancing. Taking the deceased borrower's name off the note is a separate step that generally requires a release of liability or a refinance.

LoanCare will not release the balance or a payoff quote until it has confirmed you as a successor in interest or as the estate representative — a servicer does not disclose account details until it confirms who you are. Once confirmed, request the payoff through the homeowner portal or by phone using the number on the deceased borrower's statement, or through LoanCare's Third Party Request channel, which it describes as where to "submit third party authorizations, payoff requests, and assumption documents." LoanCare accepts certified funds such as a cashier's check at 3637 Sentara Way, Virginia Beach, VA 23452. After the loan is paid in full, LoanCare states it files the lien release with the local county recorder's office in accordance with state-required timelines and sends a copy of the recorded release; it warns that recording delays or chain-of-title issues can extend that. Ask whether LoanCare services any second lien, such as a home-equity loan, on the same property, because every lien has to be cleared at payoff or sale. If a notice of error alleges LoanCare failed to provide an accurate payoff balance, LoanCare states it responds within seven business days.

A confirmed successor in interest can apply for loss mitigation without assuming the loan — that right comes from Regulation X. The specific options (repayment plan, payment deferral, modification, forbearance, short sale, or deed in lieu of foreclosure) are set by the loan's owner and administered by LoanCare, which states that "the details of the foreclosure process are different in every state." LoanCare directs a Mortgage Assistance Application to ATTN: Loss Mitigation Department, 3637 Sentara Way, Virginia Beach, VA 23452, by fax to 1-866-521-4669, by email to documents@loancare.com, or by upload through the customer portal, and states it acknowledges an eligible application in writing within five business days and gives a written decision within 30 calendar days of a complete application. Appeals go to ATTN: Loss Mitigation Department - Appeals, P.O. Box 8068, Virginia Beach, VA 23450, decided within 30 calendar days. A Single Point of Contact team is published at 1-800-909-9525. For a short sale or deed in lieu, LoanCare lists the package as the Mortgage Assistance Application signed by all borrowers, IRS Form 4506-C for each borrower, an Expense Statement, a hardship letter and documentation, income verification, and two months of bank statements; for a deed in lieu it also states the estate generally must deliver clear and marketable title free of liens and encumbrances. Notify LoanCare early rather than waiting, because the account keeps aging while the estate is organized.