A TV station in Richmond, Virginia is reporting that a family’s home was recently foreclosed on and sold at auction after a bank invoked a “death default provision” on the loan even though the mortgage was kept current by the family – months after the death of their father. Apparently, when the family patriarch signed the mortgage agreement (decades ago), it included a rare death default provision that called for full payment of the balance of the loan, in full, upon his death. The family says they were unaware of this clause and kept paying the mortgage over a period of at least 10 months totaling more than $8,500. There are a lot of lessons to be learned in this situation, not least of which is all-around due diligence.
“The mortgage lady said there was a death default on the promissory note he signed and that means when he died the entire balance was due upon his death….No one told me that for about 10 months after he passed away….They accepted every payment.” Said daughter Peggy Stroud as reported by WTVR.