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Dunmore · Aug 31, 2007, 05:55 AM

My wife and I are separating. It's amicable. We agreed that if I assumed all the household debt, mortgage, credit cards, college loans, etc. I could also have the house. The title and mortgage are in both our names. I think I understand what a quit deed is, but is the language in the separation agrement sufficient to cover what we agreed to or do I need to refinance in my name only. Thanks

rockinmommy · Aug 31, 2007, 06:06 AM

Deed work will only take her name off the actual ownership of the house. Something needs to be done with the lender to get her removed from the financial liability, as well. I don't know if an actual refi is required, or if the lender would remove her with the necessary documentation. A call to your mortgage company would answer it.

Karla in TX

ScottGem · Aug 31, 2007, 06:14 AM

Since a mortgage represents a lien on the property, any change in ownership has to be approved by the lienholder. So you do need to start with your mortgage company. They may be fine about removing the wife from the loan or they may require a refi. Only after the responsibility for the loan is settledn can you refile the deed.

rockinmommy · Aug 31, 2007, 06:35 AM

Originally Posted by ScottGem

Since a mortgage represents a lien on the property, any change in ownership has to be be approved by the lienholder. So you do need to start with your mortgage company. They may be fine about removing the wife from the loan or they may require a refi. Only after the responsibility for the loan is settledn can you refile the deed.

Technically, this is true. In reality, as long as it's a performing loan(meaning that you pay on time every month) they lender either doesn't care or doesn't notice what goes on with it. Almost every single mortgage in America today has a "due on sale" clause in it, which means that if there's a change made to the dead, the lender can call the note due. That's why people think you can't/shouldn't make changes to the deed of a property, because they're afraid the lender will call the note (demand it be paid.)

We make changes to deeds several times a year (either to transfer properties from our personal name to an LLC or Corporation, or in certain purchases where we assume the original owners mortgage)without any change to the name/names on the mortgage, have been doing so for YEARS, and have never had a mortgage company bat an eye.

I'd say if you can get a better mortgage than the one you have now, refi in just your name. If you have a great deal now - low intereste rate, etc, leave well enough alone. That being said - for your sake - in your wife's best interest, she needs to make sure that her name gets taken OFF the mortgage. If she got taken off the deed but left on the mortgage you could (not saying you would) default on the mortgage, get foreclosed, etc and she'd go down right along with you. That's one of the many ways people's credit gets messed up in divorces.

Karla

ScottGem · Aug 31, 2007, 06:42 AM

Hi Karla,
I suspect your experience is because you are more known to the lenders you deal with. I agree a lender is not likely to call a well performing loan, but, especially in today's climate, lenders will be more leery about changes that may affect their interests. It just seems to me not worth the risk of doing this without the lender's kinowledge and agreement.

Dr D · Aug 31, 2007, 08:27 AM

There is an exemtion to the Due On Sale clause in the case of a divorce. When one party is awarded the marital home in a divorce, the other party is expected to execute a quit claim deed to the other. The spouse who is no longer on title to the property will remain on the loan. That debt will be considered a "contingent liability." FNMA, the 800 pound gorilla of the mortgage industry, "will NOT require that this contingent liability be considered as part of the borrower's recurring monthly debt obligations. Although we do not require the lender to evaluate the payment history for the assigned debt after the effective date of the assignment, the lender should not disregard the borrower's payment history for the debt before its assignment." This issue should not be of undue concern to either of you.

rockinmommy · Aug 31, 2007, 09:06 AM

Scott, I WISH the lenders "knew" us. Except for a local bank occasionally, we've done this with any and every type of mortgage lender from biggies like GM, Chase, Countrywide, to other companies who we'd never heard of prior to the deal. Personally, I think it has more to do with the fact that the person at the mort. co. who would receive notification of such change is most likely a clerk of some sort who probably doesn't even know what a deed IS and just shoves the papers in a file. The person (or more likely computer) who would decide to call a note is red flagged only when people stop paying.

Technically, you are 100% correct - as usual! :D I just wanted to point out the options, I guess. I've researched this A TON. Actually attended whole seminars on this issue. I have not heard of one, single time when a performing note was called because of a deed change.

Either way, like I said in my last post - the wife would be extremely foolish to allow her name to stay on the mortgage - regardless of what happens with the deed. But SHE'S probably not reading this.

Orig. poster, sorry I hijacked your post!
Karla

rockinmommy · Aug 31, 2007, 09:12 AM

Originally Posted by rockinmommy

Either way, like I said in my last post - the wife would be extremely foolish to allow her name to stay on the mortgage - regardless of what happens with the deed. But SHE'S probably not reading this.

Karla

Thank you, Good Dr. I stand corrected! THIS, I did not know. Good info to have, though.

Dunmore · Aug 31, 2007, 10:46 AM

Karla,

In the interest of full disclosure, "SHE" will be shown this! Like I said, it is an amicable separation so far and I want to keep it that way. ;)

I appreciate everyone's response. This has been most helpful!

D

rockinmommy · Aug 31, 2007, 11:35 AM

Originally Posted by Dunmore

Karla,

In the interest of full disclosure, "SHE" will be shown this! Like I said, it is an amicable separation so far and I want to keep it that way. ;)

I appreciate everyone's response. This has been most helpful!

D

Cool! I just reread my post and realize that sounded kind of accusatory. I wasn't implying at all that you were trying to get the upper hand over her. Just literally that she probably wouldn't see it.

Good luck!
Karla