What if a Florida resident dies with a mortgage on his house and the lender fails to file a claim in the probate proceeding? Well, it’s possible that the mortgage becomes void. Here’s why: the mortgage is just collateral for the underlying loan. The loan is evidenced by a promissory note. The collateral for the loan is a mortgage on the house. In Florida the mortgage goes away when the loan obligation goes away. So, if the lender fails to file a claim in the probate proceeding, then the loan obligation goes away, so the mortgage obligation should go away with it.
Of course, lenders should file claims in probate proceedings when their borrower dies. If they do not, then they could lose their mortgage. The problem for lenders is that some of them seem to think that the mortgage is separate from the loan and that they can skip filing the claim in probate and just foreclose on the loan. Not true in Florida. They must file a claim in probate.
I expect this to be the next round of mortgage foreclosure defenses in Florida…as soon as the “robosigner” and “roboreviewer” crisis subsides.