What to do if a lender discouraged us from taking out life insurance regarding a home equity loan?
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What to do if a lender discouraged us from taking out life insurance regarding a home equity loan?
My mother passed away last year and left a small home equity loan on the house that she, my dad and my family live in. My dad and I are joint tenants and we both on the property. When we took out the loan 9 years ago, we asked the mortgager if my mother should take out life insurance on the loan. The officer said no, it was not necessary because I would be paying the loan, not her. I think this was a huge error but when we pressed her on it, she refused saying,
Asked on May 10, 2016 under Real Estate Law, Minnesota
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 8 years ago | Contributor
No, there is nothing you can do. The lender may have "discouraged" you from taking out the life insurance, but she did not stop you: you had the right to ignore her advice and take out any insurance you wanted. Since it was your choice to follow her advice, and because the mortgagor is not a financial advisor with a fiduciary duty to you, the lender is not liable for the advice their person gave or your voluntary choice to not take out insurance.
In addition, the relevant statutes of limitation, or time periods within which you must sue, if you are going to sue, in your state for a case like this would be six years or less, not eight years--so even if you might have otherwise had a case, if the loan was taken out eight years ago, it would be too late to take action.
You may need to look to selling the home to get out from under the debt.
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