Deceased Borrower Question

[Mike Hartzog]

Hey Guys,

One of my paying borrowers has unfortunately passed away. I found out via a door knock.  The agent spoke to someone at the property who was hired to do maintenance on the property and had indicated such.  I had spoken with this gentleman a number of times over the years and we were on a first name basis with each other, so I am particularly saddened by the news.

Anyone have first hand experience dealing with a deceased borrower situation? It surprises me that I have not had to deal with it until now. Ideally I want to make contact with the heirs, which I presume exist as evidenced by the maintenance work being done. If that approach does not work, I am not sure if I can pursue a normal foreclosure procedure with notifications to heirs or need to do something different. (Texas property, DOT state.) Any guidance from those who have actually navigated this particular scenario would be appreciated. Specifically, how best to go about finding and contacting heirs would be my immediate concern.

Thanks in advance

[Don Konipol]

@mike 

@Mike Hartzog.    probate laws are state specific.  probate works something like bankruptcy as it stays foreclosure.  Rarely are payments made when a property is in probate, either (1) provisions were made by the deceased in advance or (2) the inheritor is a close relative who wants to live in the house.  Otherwise, the lender will collect nothing until the court orders the property sold.  

A possible way to avoid the probate issue is to lend only to an LLC or other legal entity. This used to work always; now some courts have found it only works if the borrower did not provide a personal guarantee. this alone would be a good reason to only file deeds trusts and mortgages with the county, and not notes.