Advice, if You Need to Remove Your Name From a Joint Mortgage - The Bills.com Blog

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Advice, if You Need to Remove Your Name From a Joint Mortgage

Wednesday, Oct 1, 2008

Question: My ex-husband and I bought a house 4 years ago and the loan and deed were in both names. I wish to move out and have signed off the deed to him, our problem is our mortgage company will not refinance because we own more on our home than what it is worth due to its decreasing value in the market. What other options do I have to remove my name from the loan?

Answer: The situation you describe is one faced by many couples who are going through a divorce, especially with the downturn in the housing market which has made refinancing much more difficult for many consumers. Other than a refinance, I cannot think of any viable options to remove your name from your current mortgage loan. Your lender is not likely to voluntarily remove your name from the loan; the lender wants as many people "on the hook" for the mortgage as possible. The fact that you owe more on the home than it is worth makes it even less likely that the lender would voluntarily remove your name from the note, as the lack of equity increases the probability that you and your ex-husband will default on the mortgage. Even though your ex-husband may have every intention of keeping the loan current, the lender will want as many people as possible liable for the loan so that it has a higher chance of collecting on any deficiency balance that results in case of default and foreclosure.

While your current lender may not be willing to refinance your loan,
you may be able to find another bank willing to lend you the funds needed to refinance. Finding a loan in today’s market can be difficult, especially if your ex-husband has had any credit problems in the past; his credit is what’s important since he is the one who will be applying for the refinance loan. However, you should definitely contact various lenders to discuss your situation and find out what options, if any, they can offer you. It is unlikely that you will find a lender willing to lend you more than the home is worth; since you are upside-down on your current mortgage, you may need a large down payment available in order to obtain a refinance loan. In addition, you will need to carefully compare the terms of your current loan with those of any refinance offered to make sure that the new terms are competitive with those of your previous loan. To learn more about refinance loans, I encourage you to visit the Bills.com home refinance page.

As I mentioned, finding an affordable refinance loan may be an uphill battle given the current state of the U.S. economy and housing market. Barring your current
lender agreeing to voluntarily remove your name from your and your ex-husband’s current loan, the best thing for you to do may be to leave your name on the mortgage for the time being. Once the housing market recovers from its current depressed state, your home’s value should increase, hopefully providing you with enough equity to refinance the home at a more favorable rate without the need of a large down payment. If your ex-husband makes his payments on time each month, having your name on the mortgage could also improve your credit rating, allowing you to begin establishing your own credit accounts and thus building credit independent of your ex-husband.

There is no clear solution beyond a refinance loan, which may be out of reach at this point. Even if you are not able to remove you name from the loan, this mortgage should not cause you any problems as long as your ex-husband continues making the monthly payments on time.

I wish you the best of luck in resolving this situation, and hope that the information I have provided helps you Find. Learn. Save.

Best,
Bill
www.bills.com/blog/

Also, make sure to get a free financial health check-up with Bills IQ!

User Comments

1. Posted by tam on Friday 31st October 2008 16:15

ex awarded house in divorce still has my name on loan and I would like to have it removed. He is making payments late and this is hurting my credit, also I would like to purchase home of my own. I cannot due this with my name on his loan. He refuses to refinance because of his credit.

2. Posted by Bill on Monday 3rd November 2008 07:36

You should talk to the lender and explain the situation to them to see what can be done to get your name off of the deed. I do not know the specifics of the situation, so I cannot really comment. I think it would also be helpful if you take the help of an attorney to sort the situation.

3. Posted by Shawn on Thursday 11th December 2008 09:54

I have that exact same issue. I am in the military living in different state from where my ex-spouse resides where we own a home. I recently recieve paperwork from my ex-spouse to sign-off on a quitclaim deed per our divorce decree to remove my name off the title. Being in the military living in another state, I still claim residence because my name is on the title of the home where my ex-spouse lives and the tax benefits in that state. If I sign-off on the quitclaim deed, will it affect my residencey claim even if my name is still on the mortgage? Before I sign-off (which I do not have a problem signing off) on the paperwork, I will consult the military legal office to see if there are options, but I do understand the advice you provided to the individual on this subject. Thanks for taking time to read my comments/ question.

4. Posted by Bill on Thursday 11th December 2008 10:00

That gets a bit more complicated, so I would certainly suggest chatting with an attorney quickly or a tax advisor. Good luck.

5. Posted by suzanne styring on Monday 16th February 2009 04:50

My partner is wanting to remove his name from a joint mortgage he has with his ex partner but she doesn't want him to do this. He is now unemployed so is struggling to pay the minimum amount. Currently they have tenants in the property so he is only paying a small amount but this is still too much now that he is out of work. He doesnt want anything from the house other than his name removing. Can this be possible for him to do if he rings his mortgage lender or does she also have to agree to this?

6. Posted by Bill on Tuesday 17th February 2009 09:38

This is not as easy as just ringing up the mortgage provider. Not only will your partner's ex have to agree to do this, but they will also need to refinance the existing mortgage solely in your partner's ex's name. You will need to find out the details from the mortgage lender.

7. Posted by Serina Dixon on Monday 7th September 2009 21:48

How can I get my name off of a mortgage loan that I have with my mama..

8. Posted by Bill on Tuesday 8th September 2009 08:54

As mentioned in the article above, the best way to remove yourself from a mortgage is to refinance. This is because a mortgage is a contract between the mortgage company and the borrowers. Look at it from the mortgage company's perspective. The mortgage company provided the loan to you and your mother based on her credit score and your credit score. If the mortgage company stopped receiving payments on the property, it could require either or both of you to pay. Removing your name from the mortgage after the fact would change the conditions of the loan and the amount of risk the mortgage company would face. Refinancing creates a new loan agreement, and if your mother would refinance it would create a new mortgage agreement with (possibly) a new lender.

9. Posted by susan on Tuesday 20th October 2009 18:38

Is the government offering any assistance for couples that have split after purchasing a home and one person(that actually can afford house payments)needs to get the other person off the loan? in other words if refinancing is the only option, can the person keeping the house get any assistance? (to refinance?) or are there any other options?

10. Posted by Bill on Wednesday 21st October 2009 08:37

I am not aware of any government or private programs like the one you suggested. I would be surprised that such a program would even be proposed because some people would perceive it as the government encouraging divorce.

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