Mortgage questions

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alexfitch225

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I've asked you ladies and gentlemen on here questions before and y'all have yet to steer me wrong. I went through a divorce recently and I've kept the house, but her name is still on the deed. Is there anyway I can get her name off of the loan without refinancing? I really don't want to lose my interest rate at 3.5%. I just want to sort through all my options before I cut my losses and refinance at the current higher rate. Thank you in advance for any help you can give.

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alexfitch225 said:
I've asked you ladies and gentlemen on here questions before and y'all have yet to steer me wrong. I went through a divorce recently and I've kept the house, but her name is still on the deed. Is there anyway I can get her name off of the loan without refinancing? I really don't want to lose my interest rate at 3.5%. I just want to sort through all my options before I cut my losses and refinance at the current higher rate. Thank you in advance for any help you can give. Also everything is civil between her and I so if she needs to sign stuff it will be ok.



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I went thru the same exact thing about eight years ago. The short answer is yes, you can. The deciding factor is your single income. The finance company / bank will have to decide if it is sufficient to maintain the terms of the loan. Equity also plays a big part in that decision. I don't know that it is common though, as your total household income is probably notably reduced without her contribution (on paper anyway). My case was kind of unique as I had recently retired, had a decent thrift savings plan, an was prepared to pay off about 80% of my loan after the ex's name was off the house.

In my case, Thru a lawyer, my ex agreed to accept a set amount of cash from me in return for signing her rights to the property over to me. About 6 months later, I decided to refinance anyway, as the rates had fallen enough to make it worthwhile.

Any way you slice it, talk to a lawyer. Even though my ex never paid a dime towards the mortgage, I found out afterwards from my lawyer that since her name remained on the deed, she could have charged me rent for the months I lived in the house after the divorce. Glad she missed that one....:)

Larry
 
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It is fairly common to sell the house and divide the net proceeds, and I know of three divorces in which that was done. But it may not be practical in all cases, especially if there are minor children involved, or if one spouse insists on keeping the house.
 
The ex has her name on the mortgage, along with yours. Why should the mortgage company give up legal claim to either one of you, since you both agreed (individually and severally) to be responsible for repayment? There is no incentive, and an obvious disincentive, for the mortgage holder to give up that position.

You can ask the mortgage company to do so, but I would be surprised if they agree without renegotiation of the mortgage or refinancing.

Another point to consider is that since her name remains on the mortgage her name probably remains on the public record of ownership of the property. This may, or may not, be fully addressed in your divorce settlement. Fast forward 5, 10, or 15 years when you may want to sell or refinance the property, and you may be left with the task of clearing the title of her lawful interest in order to do what you need to do. That might require another action in court, more legal fees, etc.

Final point: Don't rely upon legal advice from an internet forum. Consult a lawyer practicing family/divorce/property law in your state of residence. A little action now may save you a lot of headaches down the road.
 
Lobo has it correct on your states laws and asking advice from your lawyer. I would think that as part of the divorce settlement, you would be receiving and recording a deed from your ex for her one half interest in the property. That is the standard in my part of the world. Now I ask, why worry about her name on the mortgage?? she just deeded your her half interest in the property and yet she remains indebted to pay the mortgage if you do not. woo hoo. checkmate baby.
 
Lobo nailed it 100%.

1. You need legal advice.
2. Mortgage holder has no incentive to just "forgive" one of the debtors.
3. If she is smart she will want you to re-finance. Should she try to buy a home in the future, the amount of this debt will still be on her credit report and considered a legal obligation and many folks can't afford TWO mortgages! What's more, if you fail to make a payment .... it's a "ding" on her credit report too and she is on the hook for repayment.
 
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I can't determine if you live in a "community property state" which can cause other related issues.

I believe that what you will need is a "novation":

"What is a novation agreement?

Novation, in contract law and business law, is the act of: replacing an obligation to perform with another obligation; or. adding an obligation to perform; or. replacing a party to an agreement with a new party. "

I would start with your mortgage company. An attorney may, or may not be required. The question for the mortgage company is whether or not your assets, credit rating, etc. will cause the mortgage company to release your former wife from the re-payment liability.

I had this situation arise with a tax client in Texas several years ago. In my client's case, she and her former husband agreed that he would have 100% of the liability for repayment. Her risk was if he defaulted or refused to make the mortgage payments and property taxes. I also contacted the Internal Revenue Service (that was back in the days when a human being actually answered the telephone call). If there is an escrow account, the mortgage company pays the property taxes and perhaps your insurance on your behalf. Then the interest and property taxes are reported to the IRS utilizing both of your social security numbers. In my case, although my client was contributing to the financial liabilities, the former spouse wanted to claim 100% of the interest and property taxes. Since they were divorced, they no longer filed a "Married Filing Jointly" tax return. It was not an amicable divorce situation - they rarely are! The situation went downhill rapidly from that point.


Bill
 
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Definitely seek advice from a qualified attorney first, but maybe you could take advantage of the situation and do a 15 year mortgage and pay it off early if that's manageable for you. We did this when we sold our last house and at our current house hold budget we'll have it paid off in 7.5 years, nice way to head into retirement. Good luck.
 
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alexfitch225 said:
I've asked you ladies and gentlemen on here questions before and y'all have yet to steer me wrong. I went through a divorce recently and I've kept the house, but her name is still on the deed. Is there anyway I can get her name off of the loan without refinancing? I really don't want to lose my interest rate at 3.5%. I just want to sort through all my options before I cut my losses and refinance at the current higher rate. Thank you in advance for any help you can give.

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I am missing something here. If you kept the house, that should have been part of the final divorce decree, as a part of the binding settlement. If the decree says that you keep the house, then your lawyer needs to draft a " Quit Claim Deed ", furnish it to her attorney for her to sign. Once returned, your attorney will file the deed in the town hall records. Her name will be gone

As for the bank or mortgage company, ask your attorney, but i doubt you will have to refinance. I presume you are taking no money from her for the monthly mortgage payment? If you do, stop, but ask your attorney.

Sooner is much better than later
 
In my years working as a real estate officer at a bank, I never once released anybody from a mortgage. In fact, it was funny to hear a customer say: "take his/her name off the mortgage and note". My blunt reply was that the bank had nothing to do with their marital problems and we aren't about to release anybody from the liability.

Typically in my area, the divorce settlement would state who got the house, and that individual was required to refinance it within a specified time, thereby removing the ex from the obligation at which time the ex would provide a quit claim deed. That assumes the individual keeping the house qualified for a mortgage loan on their own.
 
As Hoosierone explained, Mortgage Companies have no interest in taking lenders off of loans.
Why should they? You applied for the loan, you signed the IOU and other paperwork.
They could care less about your marital situation. The more folks they have responsible for a loan, the better they like it.
The OP needs a knowledgable lawyer.
And be prepared to re-fi.
And as pointed out, the existing situation is probably more of a Negative to his ex than is for him.
 
THE PILGRIM said:
As Hoosierone explained, Mortgage Companies have no interest in taking lenders off of loans.
Why should they? You applied for the loan, you signed the IOU and other paperwork.
They could care less about your marital situation. The more folks they have responsible for a loan, the better they like it.
The OP needs a knowledgable lawyer.
And be prepared to re-fi.
And as pointed out, the existing situation is probably more of a Negative to his ex than is for him.
Click to expand...

Especially if she signs the quit claim deed
 
Narragansett said:
Especially if she signs the quit claim deed
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Her Signing the quick claim deed gives him full ownership.
It does not release her from the financial responsibility of the mortgage.
If he defaults on the mortgage, the mortgage company is coming after her too.
Like if you co-sign a car loan for a kid-grandkid, and they default.
Guess what? The loan company is coming after you!
 
THE PILGRIM said:
Her Signing the quick claim deed gives him full ownership.
It does not release her from the financial responsibility of the mortgage.
If he defaults on the mortgage, the mortgage company is coming after her too.
Like if you co-sign a car loan for a kid-grandkid, and they default.
Guess what? The loan company is coming after you!
Click to expand...

I understand. My comment was about it being bad for her if it is in the decree, and she signs a quit claim, but remains on the mortgage.

I know how these things work. Been there, done that, but i had no mortgage to deal with
 
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