How to Remove a Name From a Joint Mortgage

BILL'S ANSWER

Thank you for your question about ways to remove a name from an existing mortgage.

Refinancing is the Primary Method of Changing the Names on the Mortgage

The situation you describe is one faced by many divorcing couples, especially with the downturn in the housing market which has made refinancing much more difficult for many consumers. There are four options to remove liability for a co-signed or joint loan:

1. Refinance the loan and not include a party in the refinance.
2. Sell the property in question, which will extinguish the loan liability, unless there is deficiency balance.
3. File for chapter 7 bankruptcy.
4. Allow a strategic default. However, all parties on the loan will be responsible for any deficiency balance.

A quit-claim deed removes a party’s interest in the property by changing the name(s) on the title. However, executing a quit-claim deed does not eliminate a co-borrower's financial or legal liability for the loan. The property’s title is separate from any mortgage or deed in trust that encumbers the property.

Reasons the Lender Does Not Want to Remove Someone from a Mortgage

Your lender is unlikely to remove your name from the loan voluntarily. Mortgage contracts are written to make it difficult or impossible for the parties to change the terms or conditions. Why? The mortgage originator estimated the risk for the loan based on, in the case of a joint mortgage, both borrowers' credit scores, incomes, and debt-to-income ratios. With only one person responsible for the loan, the lender is in a riskier position.

The fact that you owe more on the home than it is worth makes it even less likely the lender would remove your name from the note, as the lack of equity increases the probability that you and your ex-spouse will default on the mortgage. Even though your ex-spouse 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.

Shop Around for a Loan

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-spouse has had any credit problems in the past. His or her credit is what’s important since your spouse is the one who will be applying for the refinance loan. However, contact several lenders to discuss your situation and find out what options, if any, they offer.

It is unlikely you will find a lender willing to lend you more than the home is worth. Because 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 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.

Tough to Refinance

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-spouse’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-spouse makes the payments on time each month, having your name on the mortgage will improve your credit rating, allowing you to begin establishing your own credit accounts and thus building credit independent of your ex-spouse. If possible, have your ex keep records that prove he or she makes the mortgage payment alone. That way, you increase your chances of not having the mortgage payment counted as part of your monthly obligations when you go to qualify for a loan of your own.

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-spouse continues making the monthly payments on time.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

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Comments (245)

Jim H.
Las Vegas, NV  |  January 22, 2012

Over several years my bank has repeatedly refused to refinance my home to remove my ex-wife's name from a joint mortgage as decreed in the divorce. The home has never been close to underwater and I've never had any issues with qualifying. In fact the same bank approved me alone on a new mortgage for several times the amount of this one. Clearly, they simply don't want to lower my interest rate from 9% because it's not in their best interest to do so. Isn't this bad faith lending and they get away with because they can since their not held accountable? Money and power gets what money and power wants!

(1)

Bills.com
January 22, 2012

What reasons have lenders given you for not approving a refinance? You mentioned you have positive equity, but what is the LTV on the property? You mentioned you qualify, but what is your credit score, credit history, income history, and DTI ratio? Also, when it comes to refinances, it pays to shop! Start with the Bills.com mortgage calculator to learn how much you can save, and to receive no-cost, no-obligation, no-gimmick quotes from pre-screened lenders.

(0)

Pamela S.
Conestoga, PA  |  January 21, 2012

I was divorced in 2006. Our divorce settlement states that my name must be removed from the mortgage and deed of one of my ex-husband's properties. My name was taken off of the deed but remains on the mortgage. I found this by wanting to refinance and couldn't due to poor credit thus realizing I am still on the mortgage, which has been up for foreclosure and late payments. Do I have legal grounds for removal if it was part of our Divorce Settlement? I asked him to assume the mortgage and have my name removed. I read the above reply , and I am wondering if he has a legal obligation to uphold our agreement? He does pay the mortgage on my home I live in now and has put my name on the deed, these are two separate properties, the first one has ruined my credit and don't really know what to do, Please help, thank you.

(0)

Bills.com
January 22, 2012

Any cause of action you may have is against your spouse for failing to comply with a court order — the divorce agreement or decree. You do not have a cause of action against the mortgage servicer because it is not a party to the divorce decree.

If the jointly mortgaged property was and is upside-down, then your spouse has a legal defense for failing to comply with the order, in my opinion. If your spouse just never got around to refinancing, and the property is not upside-down, then I do not see a legal excuse. The fact that one or more of your spouse's properties is entering foreclosure implies a refinance was impossible, financially.

A deed conveys interest in the title to the property. The title is the bundle of rights that we call ownership. The title and the mortgage are separate documents, and although related, do not have a legal impact on the other. For example, if I own a property, I can use a deed to change the name of the title to my spouse, child, or best friend. My doing so does not change any mortgage I may have on the property, or the rights the lender has against me.

You asked what to do. We explained your four options in the original answer above. Consult with a lawyer in your state who has real property or bankruptcy experience. I am not suggesting bankruptcy is the best option in your situation — I do not know enough about your circumstances to offer an opinion which option is best. A bankruptcy or real estate lawyer will analyze all of your facts, and will advice you accordingly.

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OZ H.
San Jose, CA  |  January 20, 2012

I agreed to a mortgage to assist a friend and his wife. Now my mother is divorced and I want to assist her. Is there any way to get my name of the mortgage because they have no issue with it?

(0)

Bills.com
January 20, 2012

You have four options to remove your name from a joint mortgage: refinance, sell the property, file for bankruptcy, or allow a default that will result in a foreclosure. We discuss each of these options in the original answer above.

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Anthea M.
Orlando, FL  |  January 18, 2012

I bought a house with another individual 2 years ago. I am not married or in an intimate relationship with the person. Recently my co-owner declared Chapter 7 Bankruptcy and included the mortgage, leaving me solely responsible to the loan. However, his name still remains on the mortgage. The loan is current and I plan on keeping it that way. However, I no longer want his name on the loan or to binded contractually with him in anyway. I've tried to talk to him about "Reassumption", but he did not react well, at all. There is about 30K of negative equity in the house, but I have no plans to move or try and sell, and the mortgage is current and paid regularly. What are my options for getting his name off of the loan, if he is not willing to work with me civily.

(0)

Bills.com
January 21, 2012

Unfortunately, your options are limited to the four we outlined above. Your lender will almost certainly not agree to remove his name from the loan. A more important consideration than sharing the debt obligation is if his name is on title for the home.

I would recommend trying to refinance the loan, and since you are underwater this would typically be difficult but you may be able to refinance under the new HARP Loan program offered by the Federal government. This would pay off the old loan shared by your friend, and you would start over with a new loan.

Bills.com has plenty of great information about HARP, or you can apply for a mortgage quote on Bills.com. Good luck, and make sure that you check to see if you can remove your partner from the title first.

(0)

Teresa M.
Baltimore, MD  |  January 13, 2012

My son and his girlfriend bought a house together. They no longer live together. A few years she had a restraining order against him and he's no longer allowed in the house. He pays her child support. She works and gets money from the state due to my grandson being special needs child. She does not always pay the mortgage on time and sometimes it's two or three months late. She has someone else living with her. How can my son get his name off the mortgage?

(0)

Bills.com
January 14, 2012

Please reread the original answer above to learn the four ways one can remove their name from a joint mortgage.

(0)

Judene W.
January 04, 2012

My divorce was final in August 2011 and my ex has been attempting to refinance a rental property we own in New Mexico (we live in california). The divorce decree gives him full ownership of the home, although I have not signed a quit claim (yet) and won't until my name is off the loan. However, we have been told that there is some new federal law that prohibits refinancing after divorce to remove the ex's name, and that his only option would be to sell the house. I cannot find ANY info about this new law. Any help?

(0)

Bills.com
January 04, 2012

Please return to the person who told you about this "federal law" and ask him or her to cite their source. Then please send the citation to me so that we can share this with other Bills.com readers.

I would be very surprised if such a rule exists.

(1)

Lissa M.
Corvallis, OR  |  December 30, 2011

My ex husband and I divorced earlier this year, and I gave up the house in the divorce decree. It was a co-petition and the agreement is that I am held-harmless and he is responsible for the morgage on his own. Unfortunately, he cannot refinance the home due to income issues or sell it for the loan balance. The income issues are appearing now and he is struggling to make payments. (he says that the payment is now 85% of his income) My questions are: 1) Will GMAC look at his income alone, not mine, since I am no longer legally responsible? (even though it is still on my credit report, and will likely remain there until a miracle occurs) 2) Should I remove my name from the deed if I am still financially responsible, according to GMAC? 3) Is there really no possible way, no law or government program that can force a removal of my name from the loan? 4) Could he give the house back to me, even though the court shows that it is his and not mine?

(1)

Bills.com
December 31, 2011

We hear this question frequently at Bills.com, and unfortunately I cannot offer the answer you want to hear.

There are two legal issues in play here. First, you and your then-spouse signed a contract with a lender for a mortgage or deed in trust. These types of contracts are written in a manner that makes it very difficult for the parties to exit. Also, I have yet to see a mortgage or deed of trust that contains a clause that allows one co-borrower to exit the contract if the borrowers split-up or divorce. As you mentioned, one way to terminate a mortgage is to refinance.

Your second issue is the divorce decree. Yours is typical: One party gets the house and is ordered to refinance a joint mortgage. However, given the drop in housing prices and/or a weak job market, the party in the house cannot refinance. The order from the court is binding on the divorcing parties, and not third parties. You or your ex-spouse can wave the decree in front of your mortgage servicer all day, and their response will be, "We are not a party to this order, and therefore do not care what your judge ordered you two to do." On to your questions:

1. I assume GMAC is your mortgage servicer. I also assume you two applied for a short sale or mortgage modification. GMAC will want financial statements from all signers of the contract.
2. Whose name is on the property's title is irrelevant for the purposes of refinancing or qualifying for a mortgage modification. Also, if you have liability for the loan, I see no advantage for you to remove your legal claim to the property, which is what the title gives you. I do not see an upside for you to sign a quitclaim deed for the property to your ex-spouse at this time.
3. Talk to your divorce lawyer to learn if there are any persuasive court cases in your state where a divorced spouse was able to convince a court to alter the terms of a home loan contract. I doubt he or she will find anything, but it is worth the time to research the issue. One option is to file bankruptcy. Again, consult with a lawyer about this option and for which chapter you qualify.
4. The divorce court ordered both of you how to divide your assets. You can always go back to the court with a pleading that expresses what you want, and the reason why. If both parties agree to the change, the court almost certainly with go along with your idea.

Consult with your divorce lawyer to discuss these ideas.

(0)

Rockport, TX  |  November 26, 2011

If bankruptcy is my singular alternative for removing my name from mortgages I have already quit claim deeded to my ex-wife, can I file for bankruptcy in Texas to remove my name from mortgages on properties in Ohio?

(1)

Bills.com
November 27, 2011

Bankruptcy is done through the federal court system. When filing for bankruptcy you must be careful to include all of your debts. I recommend that you discuss your alternatives with a bankruptcy lawyer.

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