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Is a bank that is modifying a joint mortgage required to have the signatures of both parties on the modification?

My daughter is separated from her husband and living in my home. He is currently living in the home and plans to keep it. My daughter called the mortgage company on 4/30/2010 and advised them that she is not living in the home and ask them to make a note not to refinance or modify the loan to lower the payment because of the divorce. They said they would make a note on the account so that the mortgage would not be refinanced since she would not approve. On 5/07/2010, the company modified the loan to lower the payment without my daughter's signature. The question is: Is a mortgage company required to have the signatures of both parties on a joint loan?

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Bills.com | Find Learn Save

Yours is the second message to me in as many weeks that suggested a mortgagee modified a joint mortgage with the signature of only one of the mortgagors.

Is this is a good business practice for the mortgagees? I do not think so. Is this wide spread? I do not think so. Is a modified mortgage with the signature of only one mortgagor a legal document? Probably, but I have not seen any court cases that focus on this issue. I hasten to add that I am not a Supreme Court justice in your state (or any other for that matter), and my opinion and $5 will get you a latte.

Ask your daughter to consult with her divorce attorney about this matter. He or she will be able to read the modified mortgage documents in person, review your daughter's state laws, and offer a more precise guess.

I encourage readers who have been a party to a one-signature joint mortgage modification to comment below.

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

Best,

Bill

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  • JR
    Oct, 2012
    Joni
    Murrells Inlet, SC
    My boyfriend is the victim of loan modification done on his mortgage by his ex-wife with only her signature (She got house via quit claim deed in divorce settlement)- as borrower, he was not informed about this modification nor asked to sign - we obtained the modification documents from mortgage company (fortunately an inexperienced employee there sent them to my boyfriend) and there is a place for his signature as borrower but obviously not signed. We currently have an attorney looking into this, have gotten Clark Howard.com involved and considering calling Consumer Finance.gov to report this as advised by Clark Howard's team. Any other suggestions would be helpful. This is wrong - she extended the 20-year mortgage out to 40 years - all for a measly $173/month savings to her. Mortgage company has to be negligent here I would think.
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    • BA
      Nov, 2012
      Bill
      First, what is your friend's goal for objecting to the refinance? To unwind the clock and return to the terms of the original loan? Or to extricate himself from the 40-year loan?

      Second, consult with a lawyer who has consumer law or contracts litigation experience. Depending on the state laws where the refinance contract was signed, the new loan may be void because the co-signer failed to execute (sign) the loan. Or, state law may allow one co-signer to refinance. A lawyer will advise your friend accordingly.
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