Generally speaking, if you transfer a piece of real property subject to a mortgage to another person, that transfer violates the "due on sale" clause in your mortgage, essentially making the mortgage immediately due in full. In the course of buying or selling property, you would pay off the mortgage upon the sale of the property. However, what happens when the property is transferred due to the death of the owner?

Federal law provides some exceptions to the "due on sale" clause when the

property subject to a mortgage (other than a reverse mortgage) is being transferred as a result of the person's death. While a full list of the exceptions to the "due on sale" rule can be found in The Garn St. Germain Depository Institutions Act of 1982, (U.S.C.) 1701j-3(d)(8), for estate planning purposes, property owners should be aware that the "due on sale" clause will not apply to...

Please see full article below for more information.