What Happens to a Mortgage When the Homeowner Dies in New York: Heirs, Executors and Foreclosure

By Albert Goodwin, Esq., attorney admitted in New York, practicing estate administration and Surrogate's Court litigation. Last reviewed 2025. This article is general legal information for New York residents and is not advice about any particular estate.

A note on terms. In mortgage law, the "mortgage holder" or "mortgagee" is the lender. The person who signed the note and owes the money is the "borrower" or "mortgagor." Most people searching for this topic want to know what happens when the borrower, the homeowner, dies. That is what this page covers. If the lender itself has died (a private mortgage from an individual), the note and mortgage are assets of the lender's estate, and the estate's fiduciary collects the payments or assigns the loan. We address that briefly at the end.

The Short Answer for New York Families

• The mortgage does not die with the homeowner. It stays a lien on the house.
• Under EPTL 3-3.6, the person who inherits the house takes it subject to the mortgage. The estate does not have to pay the mortgage off from other assets unless the will says so.
• Heirs are not personally liable for the loan unless they signed the note or later assume it in writing. The lender's remedy against a non-signing heir is foreclosure on the house, not a judgment against the heir.
• Federal law (12 U.S.C. § 1701j-3(d)) bars the lender from calling the loan due just because the house passed to a relative at death.
• In New York, a lender cannot simply foreclose against a dead borrower. The lender must deal with an estate fiduciary or with the heirs as owners, which takes time. Heirs can use that time.
• Reverse mortgages (HECMs) are different. They become due at death, and the family usually has six months, with possible extensions, to pay, sell, or hand over the property.

The Mortgage Survives the Borrower: EPTL 3-3.6

New York's Estates, Powers and Trusts Law answers the first question directly. EPTL 3-3.6(a) provides that when property subject to a lien, security interest or other charge at the time of death passes by will, by intestacy, or to a surviving joint tenant, the person who receives it takes it subject to that charge. The will can direct otherwise, but EPTL 3-3.6(b) adds that a general direction to "pay my debts" is not enough. The will must specifically direct that the mortgage be paid from the estate.

In practice, this rule decides who absorbs the mortgage. If a Bronx homeowner leaves the house to one child and the bank accounts to another, the child who gets the house gets the mortgage with it. The child who gets the cash does not have to contribute. Executors who pay a mortgage balance off from the residuary estate without authority in the will can be surcharged by the other beneficiaries in an accounting.

The lien also survives any change in ownership. Recording a new deed to the heirs does not remove the mortgage from the title. Only a satisfaction of mortgage, recorded after payoff, does that.

Who Owns the House the Day After Death

New York treats real property differently from bank accounts and other personal property. Personal property passes to the executor or administrator, who later distributes it. Real property vests in the heirs or the beneficiaries under the will at the moment of death, subject to the fiduciary's power to sell it or use it to pay debts (EPTL 11-1.1(b)(5); SCPA 1902). The fiduciary manages the house during administration, but the heirs are its owners from day one.

How title was held determines whether the Surrogate's Court is involved at all:

• Joint tenants with right of survivorship: the survivor owns the whole property automatically. No court proceeding is needed. The survivor records a death certificate with an affidavit so the county clerk or ACRIS shows clean title, and takes the house subject to the mortgage.
• Tenants by the entirety: a deed to a married couple creates a tenancy by the entirety unless it says otherwise (EPTL 6-2.2(b)). The surviving spouse becomes sole owner by operation of law, subject to the mortgage.
• Sole owner with a will: the house passes to the person named in the will, but the executor needs letters testamentary from the Surrogate's Court in the county where the decedent lived (SCPA 1402 et seq.) to deal with the lender, sell, or deliver an executor's deed. See our page on obtaining letters testamentary in New York.
• Sole owner without a will: the house passes under EPTL 4-1.1 to the spouse and children, or to more distant relatives if there are none. An administrator must be appointed under SCPA 1001. See letters of administration.
• Revocable trust: the successor trustee controls the house without court involvement under the trust terms. The mortgage still applies, and the trustee should notify the servicer.
• Co-op apartment: a co-op "mortgage" is a loan secured by shares and a proprietary lease, not real property. Transfer to an heir requires board approval under the lease, and the share loan is paid at closing or assumed only if the lender and the board permit it.

The small estate procedure under SCPA Article 13 does not cover real property. A family cannot use a voluntary administrator's affidavit to transfer or sell a mortgaged house. Full letters are required.

Federal Protections: Garn-St. Germain and the CFPB Successor Rules

Nearly every residential mortgage contains a due-on-sale clause allowing the lender to demand full payment if the property is transferred. The Garn-St. Germain Depository Institutions Act, 12 U.S.C. § 1701j-3(d), prevents the lender from exercising that clause for a loan secured by residential property with fewer than five dwelling units (including co-op shares) when, among other exemptions, the transfer is:

• by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety (§ 1701j-3(d)(3));
• to a relative resulting from the death of the borrower (§ 1701j-3(d)(5));
• one in which the borrower's spouse or children become owners (§ 1701j-3(d)(6)); or
• into an inter vivos trust of which the borrower is a beneficiary and which does not change occupancy rights (§ 1701j-3(d)(8)).

Two limits matter. First, the statute stops acceleration because of the transfer. It does not stop foreclosure for nonpayment. If no one pays, the lender can foreclose. Second, the statute does not make the heir the borrower. It lets the heir keep the loan in place. There is a difference between continuing to pay as a successor in interest and formally assuming the loan:

• Continuing to pay: the heir makes the monthly payments, the loan stays in the decedent's name, and the heir has no personal liability for the balance. If the heir later stops paying, the lender forecloses on the house but cannot pursue the heir for a deficiency.
• Assuming the loan: the heir signs an assumption agreement and becomes personally liable on the note. Lenders may not refuse to let a Garn-St. Germain successor assume on the basis of the transfer, and the CFPB's 2014 interpretive rule allows servicers to process such assumptions without a new ability-to-repay underwriting. Assumption makes sense when the heir wants the loan reported on their own credit or needs to be the named borrower for a future modification, but it trades away the protection against a deficiency.

The Consumer Financial Protection Bureau's mortgage servicing rules add a procedural layer. Under Regulation X, 12 C.F.R. §§ 1024.30 through 1024.41, and Regulation Z, 12 C.F.R. § 1026.2(a)(11), a servicer must have policies to identify and communicate with potential successors in interest, must tell them what documents it needs, and must treat a confirmed successor in interest as the borrower for purposes of periodic statements, payoff requests, error resolution, and loss mitigation. A confirmed successor can apply for a loan modification without assuming the loan.

Documents New York servicers typically request to confirm successor status:

• certified death certificate;
• for a surviving joint tenant or spouse: a copy of the recorded deed;
• for an estate: certificate of letters testamentary or letters of administration, and the will if there is one;
• for a trust: the trust instrument or a certification of trust under EPTL 7-1.18;
• government-issued identification.

Month by Month: Managing the Mortgage During Estate Administration

The first 30 days

Someone needs to find the mortgage statement, confirm the servicer's name, and call to report the death. Most servicers will accept the death certificate and open a successor-in-interest file even before anyone has letters. Ask for the monthly payment amount, the escrow status, and the address for written correspondence. Send the death certificate in writing and keep proof of mailing.

Keep paying if the family can. A missed payment in month one becomes a default notice in month two and a RPAPL 1304 notice in month four. Catching up later costs late fees, attorney fees, and sometimes the right to a modification.

Check the homeowner's insurance. Many policies restrict or deny coverage for a home left vacant for more than 30 or 60 days. Notify the carrier of the death and the occupancy status. Check whether the house has a STAR or senior exemption on its property taxes. Those exemptions end with the owner, and the next tax bill will be higher unless a qualifying heir reapplies.

Getting letters quickly

Servicers will talk to a confirmed successor, but they generally will not let anyone sell, refinance, or sign binding documents for the estate without letters. In New York City, full letters often take two to four months; in some upstate and Long Island counties they can be faster. If the house is in default or a sale is pending, there are faster routes:

• Preliminary letters testamentary (SCPA 1412): available when there is a will and probate will take time, often because a beneficiary must be cited or a waiver is outstanding. Preliminary letters allow the nominated executor to secure assets, pay the mortgage, and communicate with the servicer.
• Temporary administration (SCPA Article 9): available when there is no will, or a dispute over who should serve, and estate property is at risk. The court can limit the temporary administrator's powers to preserving the house.

Our page on a sample NYC probate timeline shows how these steps fit into a full administration.

Who pays the mortgage while the estate is open

There is no statute that tells an executor to pay the mortgage every month. The executor's duty is to preserve estate property (EPTL 11-1.1). Keeping the loan current is how an executor preserves a mortgaged house, and payments from estate funds for that purpose are a proper administration expense. Because EPTL 3-3.6 puts the mortgage on the beneficiary who receives the house, the executor should track those payments. On the accounting, the court can charge them against the share of the beneficiary who inherits the house, so that the beneficiaries of the cash assets are not subsidizing it.

If a family member lives in the house and wants to keep it, the usual arrangement is that the occupant pays the mortgage, taxes, and insurance directly, with a written acknowledgment so that those payments are credited later. If the occupant is one of several heirs and the others disagree, the questions become whether the occupant owes use and occupancy to the estate and whether the mortgage payments are reimbursable. Those issues are covered on our pages about a beneficiary living in an inherited house and a sibling living rent-free in the inherited house.

When the estate has no money

An executor is not required to pay the mortgage from personal funds and should not. If there is no cash in the estate and no heir willing to pay, the realistic options are to sell the house promptly, to request loss mitigation from the servicer as a confirmed successor, or to let the lender foreclose. An executor who does nothing while the house sits in default can be held responsible for the lost equity. The executor can petition under SCPA 1902 for authority to sell real property to pay debts and expenses when the will does not already grant a power of sale.

The seven-month creditor period

Under SCPA 1802, creditors have seven months from the issuance of letters to present claims. SCPA 1811 sets the order in which a fiduciary pays debts: funeral and administration expenses first, then debts with statutory preference, taxes, judgments, and then general debts. A mortgage lender is a secured creditor. It does not need to file a claim to keep its lien, and it looks to the house rather than to the general estate. The lender can also file a claim for any deficiency, which the estate would have to address only if the lender obtains a deficiency judgment under RPAPL 1371 after a foreclosure sale.

One other creditor to watch: if the decedent received Medicaid after age 55, the Department of Social Services may present a claim against the estate under Social Services Law § 369, and that claim can reach the house. It should be resolved before the executor distributes the property.

Distributing the house

When administration is complete, the executor delivers an executor's deed (or administrator's deed) to the beneficiary. The deed is recorded in the county clerk's office, or through ACRIS in the five boroughs, with Form TP-584 and, in New York City, Form NYC-RPT. A transfer to a beneficiary without consideration is not a taxable conveyance for the New York State real estate transfer tax or the NYC real property transfer tax, but the returns must still be filed. The mortgage stays on the title. No new mortgage recording tax is due because no new mortgage is being recorded.

Foreclosure Against a Deceased Borrower in New York

New York is a judicial foreclosure state. The lender must sue in Supreme Court in the county where the property is located. When the borrower has died, the procedure gets slower, and families should understand why.

Pre-suit notices

For a "home loan" (RPAPL 1304(6)), the lender must mail a 90-day pre-foreclosure notice to the borrower at the property address and the last known address, by certified and first-class mail, and must file proof of the notice with the Department of Financial Services within three business days (RPAPL 1306). Failure to comply is a complete defense. How RPAPL 1304 applies when the only borrower is dead is contested in the trial courts, and the answer often depends on whether the lender is proceeding against the estate for a deficiency or only against the heirs as owners. An attorney defending a foreclosure should check compliance in every case.

When the action is filed, the summons for a residential property must include the RPAPL 1320 notice and the RPAPL 1303 "Help for Homeowners in Foreclosure" notice on colored paper.

The lender needs a proper defendant

A lawsuit cannot be commenced against a dead person, and if a defendant dies during the case the action is stayed until a representative is substituted (CPLR 1015, 1021). In a foreclosure after death, lenders take one of two paths:

• Proceed against the estate: the lender needs an executor or administrator to name. If the family has not applied for letters, the lender, as a creditor, can petition the Surrogate's Court for letters of administration under SCPA 1002, and the court will often appoint the Public Administrator of the county. That takes months, and the Public Administrator will charge the estate commissions and fees.
• Proceed against the heirs as owners: because title vests in the heirs at death, a lender that waives any deficiency against the estate can name the heirs and distributees directly, together with "unknown heirs" served by publication. Courts have permitted this in rem approach when the lender seeks only the property.

Either way, the family usually gains time. That time should be used to get letters, confirm successor status with the servicer, gather income documents, and decide between keeping and selling.

The mandatory settlement conference

CPLR 3408 requires a settlement conference in a residential foreclosure involving a home loan where the defendant lives in the property. An heir who lives in the house and has been named as a defendant can generally participate, and the court can direct the lender to review the heir for a modification as a confirmed successor in interest. Both sides must negotiate in good faith. Bring the letters, the death certificate, proof of income, and a hardship letter to the first conference.

Statute of limitations and the Foreclosure Abuse Prevention Act

A foreclosure action must be commenced within six years of acceleration of the debt (CPLR 213(4)). Filing a foreclosure complaint accelerates the loan. The Foreclosure Abuse Prevention Act (L. 2022, ch. 821), effective December 30, 2022, amended CPLR 203(h), 205-a, and 213(4) and RPAPL 1301 so that a lender can no longer discontinue an action and "de-accelerate" to restart the clock. Estates of long-deceased borrowers sometimes involve a loan that was accelerated in a prior action more than six years ago. If so, the lender may be time-barred, and the heirs may be able to clear the lien through an action under RPAPL 1501(4). This is a fact-specific analysis, and the timeline of every prior action matters.

Deficiency judgments

After a foreclosure sale, the lender has 90 days from delivery of the referee's deed to move for a deficiency judgment (RPAPL 1371). The deficiency can only be entered against a party who is personally liable on the note: the estate, if the fiduciary was named and served, or a co-borrower. It cannot be entered against an heir who never signed. Because New York estates of modest means often have nothing beyond the house, lenders frequently waive the deficiency rather than pursue it.

Options for Heirs

Keep the house and keep paying

The simplest path. Confirm successor status, keep the payments current, record the deed when letters issue, and change the insurance into the heir's name. The loan stays in the decedent's name and the heir's credit is not affected.

Modify the loan

A confirmed successor can apply for a modification under the servicer's loss mitigation rules. For FHA, VA, Fannie Mae, and Freddie Mac loans, the investor guidelines each have specific successor provisions. A modification usually requires the heir to assume the loan as part of the modification agreement.

Refinance

An heir who qualifies can refinance into a new loan. In New York, a refinance of the full balance triggers mortgage recording tax (Tax Law § 253 and the New York City counterpart) unless the new lender agrees to a consolidation, extension and modification agreement (CEMA), which carries the existing mortgage forward and taxes only the new money. The heir must hold recorded title before closing, so the executor's deed comes first. See borrowing against inherited property in New York.

Buy out the other heirs

When one heir wants the house and the others want cash, the usual structure is a refinance that pays off the existing mortgage and funds the buyout. If the heirs cannot agree, any co-owner can bring a partition action under RPAPL Article 9, and the court will sell the house and divide the net proceeds after the mortgage. Our pages on buying out an inherited residence and partition of real property go through the process.

Sell

The executor can sell under the power of sale in the will or under EPTL 11-1.1(b)(5), or the heirs can sell after the deed is recorded. The mortgage is paid from the proceeds at closing, and the title company obtains the satisfaction. If the house is worth less than the loan, the servicer must approve a short sale; a confirmed successor can apply.

Deed in lieu or walking away

If there is no equity and no one wants the house, the fiduciary can negotiate a deed in lieu of foreclosure, which usually includes a waiver of any deficiency. Simply abandoning the house is a poor choice for an executor, because the estate continues to accrue liability for taxes, water charges, and violations until the referee's deed is delivered.

Reverse Mortgages (HECMs) After the Borrower Dies

A home equity conversion mortgage insured by HUD becomes due and payable when the last surviving borrower dies (24 C.F.R. § 206.125). The rules differ from a conventional mortgage in several ways:

• Non-borrowing spouse: an eligible surviving spouse who was married to the borrower at origination and lives in the home may be able to defer the due-and-payable status for life under HUD's non-borrowing spouse rules, depending on the loan's origination date. The spouse must keep taxes, insurance, and maintenance current and must respond promptly to the servicer's deadlines.
• Six-month window: the servicer sends a due-and-payable notice and, under HUD guidelines, is expected to begin foreclosure within six months unless the estate or heirs are actively selling or obtaining financing. HUD can approve up to two 90-day extensions on request, with proof of progress.
• The 95 percent rule: heirs who want to keep the home can satisfy the loan by paying the lesser of the full balance or 95 percent of the current appraised value. A sale to a third party at 95 percent of appraised value also satisfies the debt.
• Non-recourse: the FHA insurance covers any shortfall. Neither the estate nor the heirs owe a deficiency, and HUD prohibits the servicer from pursuing one.
• Deed in lieu: if no one wants the house, the fiduciary can convey it to the servicer, which is usually faster than letting it go to a foreclosure sale.

The six-month clock runs from the date of death, not from the date letters issue. Families with a reverse mortgage should apply for letters immediately, because the servicer will not accept a listing agreement or a payoff from someone without authority to sign for the estate.

Illustrative Scenarios

The following are hypothetical examples constructed to show how the rules interact. They are not descriptions of actual client matters or outcomes.

Queens two-family house, four heirs, one living there

A widow dies intestate in Jamaica, Queens, owning a two-family house with a $180,000 balance on a conventional mortgage. Her four children inherit equal shares under EPTL 4-1.1. One daughter has lived in the downstairs unit for years and wants to stay. The upstairs tenant pays $2,100 a month. The daughter petitions for letters of administration with waivers from her siblings, keeps the mortgage current from the rent, and is confirmed as a successor in interest. The siblings agree to a buyout at appraised value less the mortgage, financed by a refinance with a CEMA once the administrator's deed to the daughter is recorded. If one sibling had refused to sign, the daughter's alternative would have been a partition action, in which her mortgage payments and the rent collected would both be accounted for.

Brooklyn house already in foreclosure at death

A homeowner in East Flatbush dies with a foreclosure action pending in Kings County Supreme Court. The action is automatically stayed under CPLR 1015 until an estate representative is substituted. The lender moves for appointment of the Public Administrator. Before that motion is decided, the decedent's son obtains letters of administration himself, which lets him control the estate rather than leaving it to the Public Administrator and the associated fees. He is substituted as administrator, confirmed as a successor, and the case goes to the CPLR 3408 settlement conference. Because he lives in the house and has income, he applies for a modification that includes an assumption. The administrator also reviews the court file and finds the loan was accelerated in an earlier action that was discontinued in 2016; under FAPA that earlier acceleration may bar the current action, and the defense is raised in the answer.

Long Island reverse mortgage with an underwater balance

A Suffolk County homeowner with a HECM dies, and the loan balance exceeds the home's value. His daughter, as executor, receives the due-and-payable notice. She obtains an appraisal, confirms the house would sell for roughly 90 percent of the balance, and decides the family does not want to keep it. She lists the house and, within the six-month window, requests a 90-day extension with a copy of the listing agreement. The sale closes at 95 percent of appraised value, the loan is treated as satisfied, and the estate owes nothing further because the loan is non-recourse.

New York City Specifics

• Recording: deeds and satisfactions in the five boroughs are recorded through ACRIS with the NYC-RPT and TP-584 forms. Outside the city, the county clerk records them with the TP-584 only.
• Property tax exemptions: STAR, senior citizen (SCHE), and disabled homeowner exemptions end at the owner's death. The Department of Finance will remove them at the next assessment roll, and the heir must apply in their own name.
• Water and sewer: DEP charges are a lien that takes priority over the mortgage. Keep them current during administration.
• Co-ops: the board, not the Surrogate's Court, controls whether an heir can take over the apartment. The share loan must be addressed in the board package.

We handle these matters from our offices for clients across the city. See our Brooklyn probate attorney page for Kings County procedures.

Mistakes We See Most Often

• Waiting for letters before calling the servicer: successor-in-interest status can be opened with a death certificate. Months of silence lead to default.
• Paying off the mortgage from estate cash without reading the will: EPTL 3-3.6 puts that cost on the house's beneficiary, and the other beneficiaries can object.
• One heir paying everything with nothing in writing: reimbursement in a later buyout or partition becomes a dispute about proof.
• Assuming the loan without need: an heir who assumes gives up protection against a deficiency judgment.
• Letting the Public Administrator take over: once appointed on the lender's petition, the Public Administrator controls the sale and charges the estate for it.
• Ignoring the reverse mortgage deadline: the six months run from death, and extensions require documented progress.
• Letting insurance lapse on a vacant house: a fire or burst pipe with no coverage can wipe out the equity.

Frequently Asked Questions

Do I have to pay my parents' mortgage in New York?

Not personally, unless you co-signed. If you inherit the house, you take it subject to the mortgage under EPTL 3-3.6, and the lender can foreclose if nobody pays. The lender cannot get a money judgment against you for the balance.

Can the bank foreclose while the estate is in probate?

Yes, but it must name a proper defendant. The lender needs an appointed executor or administrator, or it must proceed only against the heirs as owners and waive the deficiency. An action pending at the time of death is stayed under CPLR 1015 until a fiduciary is substituted.

Can heirs assume a mortgage in New York?

A relative who inherits the home is protected from the due-on-sale clause by 12 U.S.C. § 1701j-3(d) and can keep paying without assuming. A formal assumption, which creates personal liability, is available through the servicer and is usually required as part of a loan modification.

Does the estate have to pay off the mortgage?

Only if the will specifically directs it. A general clause about paying debts is not enough (EPTL 3-3.6(b)).

How long do we have with a reverse mortgage?

Generally six months from death, with up to two 90-day extensions available through HUD if the estate is actively selling or arranging financing.

What if the lender was a private individual who has died?

The note and mortgage are assets of the lender's estate. Payments go to the lender's executor or administrator, who can also assign the loan or deliver a satisfaction. The borrower should request written proof of the fiduciary's authority before paying anyone.

Related New York Estate Pages

• Who can enter a house after the owner dies
• When a house is in two names and one owner dies
• A beneficiary living in the inherited house
• Borrowing against inherited property
• Buying out co-heirs of an inherited residence
• Bank accounts with no beneficiary after death
• Ways to avoid probate in New York

How We Help

We represent executors, administrators, surviving spouses, and heirs in New York matters involving mortgaged property, including obtaining preliminary and full letters, confirming successor-in-interest status with servicers, negotiating modifications and deeds in lieu, defending foreclosure actions in Supreme Court, handling partition and buyout disputes among heirs, preparing and recording executor's and administrator's deeds, and resolving reverse mortgage payoffs. If you are an executor with a mortgage coming due, or an heir trying to keep a family home, call us to discuss the facts and the deadlines that apply to your estate.