How to Remove a Name From a Joint Mortgage

My ex-spouse and I bought a house 4 years ago. I need to leave. How can I remove my name from the mortgage?

My ex-spouse and I bought a house four years ago and the loan and deed are in both names. I wish to leave and sign a quitclaim deed. Our mortgage company will not refinance because we owe more on our home than what it is worth due to the drop in market prices in our area. What are my options to remove my name from the mortgage?

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Highlights


  • Review the difficulties involved in removing a name from a mortgage.
  • Understand that refinancing is the best option for changing the names on the mortgage.
  • Shop around when looking for a mortgage.

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.

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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-spouse 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

247 Comments

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  • SS
    Oct, 2012
    Suzanne
    Left in 2005. My name is still on the the deed to house and on all 3 mortgages. He is lazy and has not paid any on the loans in 60 payments. He has control of house and I want out! I used to have 752 credit score and now I am scared to look cause he screwed me over once again. What do I do or can I do?
    0 Votes

    • BA
      Oct, 2012
      Bill
      It sounds like your options are very limited. If your name is on the mortgage loans, then your are jointly responsible for all the payments. If payments have not been made for five years it seems likely that the lender will foreclose on the property. Is the home worth more than the balance on all the loans? If so, you might be liable for any deficiency balance.

      You can speak to the lender about reaching an agreement for a short sale, but that will involve getting his (I am not sure of your status) approval. If the house will go to foreclosure, then you will need to deal with any money owed after the sale. I recommend that you speak with a lawyer about your options.
      0 Votes

  • JH
    Jan, 2012
    Jim
    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!
    5 Votes

    • BA
      Jan, 2012
      Bill
      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 Votes

  • PS
    Jan, 2012
    Pamela
    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.
    1 Votes

    • BA
      Jan, 2012
      Bill
      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.
      0 Votes

  • OH
    Jan, 2012
    OZ
    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 Votes

    • BA
      Jan, 2012
      Bill
      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.
      0 Votes

  • AM
    Jan, 2012
    Anthea
    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 Votes

    • BA
      Jan, 2012
      Bill
      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 Votes