My husband co-signed a mortgage and a line of credit for his mother 3 years ago when she bought her house. For the past two years we have been giving her money to pay the mortgage. We went to apply for a loan ourselves and were denied because apparently she made late payments on the loan. She claims that it is a mistake, but the Bank claims that it is not and will not remove the mark on our credit. I want to get our names separated from each other. I should also mention that she owes more then the house is worth and that she does not have any income other then us. What are our options?

You are basically stuck, she will have to get a new loan to pay off the current one to get you off, if she had to get a co-signer before ( and there would be a reason) she will need more now, with late payments.

Why not get her to give you the money and you make sure it is paid on time?