Many of us are caring for aging parents. As they pass on quite often they leave their home to a loved one. The question is, what is our obligation? Now, I am NOT a lawyer and if you want true legal advice you should contact one, but….
The good news is you and any other heirs will have no liability for it, unless a family member or members co-signed the mortgage, which would oblige them to pay the original creditor. The creditors would likely pursue satisfaction of the note from the estate
There’s probably no reason to pay the mortgage, unless a family member wants to assume the loan. Not all lenders allow assumptions by family members following the death of original mortgagors, but many do, especially in this still-soft resale market in which tons of foreclosure inventory still sits on the books. If the mortgage is assumed, make sure the proper paperwork is filed immediately, and the death notice is presented to the lender.
Unless other arrangements are made, the lender will foreclose on the house if loan payments stop. As noted earlier, heirs have no legal obligation to pay off a house left to them in a will. Hence, the house would then become the lender’s problem. The bank would then sell the house, probably at a loss, in which case the lender may enter a deficiency judgment against your father’s estate — a judgment that would, as you surmised, eat up any remaining estate assets and render the estate insolvent.