BILL'S ANSWER
I would encourage you (or your wife) to speak with your mortgage broker and with a representative of the Federal Housing Administration to determine the FHA’s lending policies regarding properties with two owners on a deed. You can contact the FHA by visiting www.fha.gov. From my past experience, most lenders are happy to include someone on the mortgage who is not listed on the deed, as this gives them someone else who is liable in case of default. On the other hand any bank offering a mortgage on a property with two owners listed on the deed would likely want both owners listed as obligors on the note. In most states, if a property lists two owners, then each owner is considered to own half of the property; therefore, a mortgage that is only owed by one of the owners creates a lien on only half of the property. For example, if you and your wife were listed on the deed and only your wife was listed on the mortgage, if she defaulted on the mortgage, the creditor would not be able to proceed with the foreclosure of the home until it had paid you for your interest in the property. No mortgage lender that I know would offer a mortgage on a home and only take a security interest in half of the homeÂ’s value, which is what a lender would be doing in the situation you describe in your question. Rather than being listed on the note itself, some lenders will allow you to sign a consent agreement, stating that you agree to the mortgage of the property; speak with you broker if you are interested in such an arrangement. If you would like to learn more about mortgage loans and the various options available to consumers, I invite you to visit the Bills.com mortgage page.
Since your wife is taking possession of the familial home in the terms of your divorce, the most logical thing to do, in my mind, would be to sign over the deed to her sole possession, thus allowing her to improve, refinance, or sell the home unencumbered. However, I am not licensed to practice law in your state, so I cannot provide you with legal advice in this matter. You may need to retain partial ownership of the property for some legal reason about which I am unaware, as I do not know all of the details of you and your spouseÂ’s financial and martial situation. Since you are in the middle of a divorce, I assume that you have an attorney representing you in legal proceedings and in negotiations with your wifeÂ’s attorney. I strongly encourage you to contact your attorney to discuss this situation and determine what course of action you need to take to preserve your rights as a homeowner while honoring your obligations under the divorce settlement agreed upon by you and your wife.
Again, I think that the best thing you can do in this situation is to speak with your attorney, your mortgage broker, and the FHA, to find out what options are available to you and your wife to effectively resolve any issues related to your property. I wish you the best of luck in resolving these questions.
I hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
August 16, 2010
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