The California Dream For All Shared Appreciation Loan program has helped countless first-time homebuyers achieve their dream of homeownership. However, life is unpredictable, and it's essential to understand what happens to the loan if the borrower passes away. In this article, we'll explore the obligations of heirs and the loan repayment process in the event of the borrower's death.

Loan Repayment Upon the Borrower's Death

If a borrower with a Dream For All Shared Appreciation Loan passes away, the loan will need to be repaid. The repayment amount includes:

  • The original principal balance of the loan
  • A share of the home's appreciation, as outlined in the loan terms

The shared appreciation portion is calculated based on the difference between the original purchase price and the current appraised value of the property at the time of the borrower's death.

Obligations of Heirs

When a borrower with a Dream For All loan passes away, their heirs become responsible for repaying the loan. Heirs should:

  1. Consult the legal documents related to the loan, including the Promissory Note and Deed of Trust, to understand the specific terms and obligations.
  2. Contact CalHFA to obtain the payoff amount due, which will include the principal balance and the shared appreciation amount.
  3. Work with CalHFA and any other lenders involved to arrange for the repayment of the loan, either through the sale of the property or by refinancing the mortgage.

Heirs must act promptly and communicate with CalHFA to ensure a smooth loan repayment process and avoid any potential legal or financial complications.

Options for Heirs

Heirs of a borrower with a Dream For All loan have a few options when it comes to handling the property and the loan repayment:

  • Sell the property: Heirs can choose to sell the property and use the proceeds to pay off the Dream For All loan, including the principal balance and shared appreciation amount. Any remaining funds from the sale would then be distributed according to the borrower's will or estate plan.
  • Keep the property: If the heirs wish to keep the property, they will need to refinance the mortgage to pay off the Dream For All loan. This will involve applying for a new mortgage in their own names and using the funds to satisfy the Dream For All loan repayment, including the shared appreciation amount.

In either case, it's essential to work closely with CalHFA and a knowledgeable lender to ensure that all requirements are met and the loan is repaid in accordance with the program guidelines.

At Tennant Lending, we understand that dealing with the loss of a loved one is a difficult and emotional time. Our compassionate and experienced team is here to help heirs navigate the Dream For All loan repayment process with sensitivity and professionalism.

If you are an heir of a borrower with a Dream For All Shared Appreciation Loan, contact Tennant Lending today. We will work closely with you and CalHFA to determine the payoff amount, explore your options, and guide you through the loan repayment process. Our goal is to make this challenging time as stress-free as possible while ensuring that all program requirements are met.

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