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ggrr87 · Dec 21, 2007, 03:31 AM

My friend, Al, is going through a bitter divorce,
And she is still dragging this out.. Not Settled.
She qualifies by her self to refinance the mortgage, and she wishes to remove his interest.
Al doesn't want to be on the new loan, but he wants to protect his interest. What form does he need to sign which allows her to be obligated for the new loan, but he remains on Title. And how should the vesting be drawn? Her.. Single and separate ? Or Tenants in common? :confused: Thanks Friend.

excon · Dec 21, 2007, 05:56 AM

Hello g:

The bank isn't going to go along with that arrangement. If SHE fails to pay, the bank is going to take the house, and doesn't want to argue with AL about it. For his part, I'm sure Al would put up quite an argument.

If he's happy waiting for his equity, he can file a lien. He should only do this in consort with an ATTORNEY.

excon

life1973happened · Dec 21, 2007, 06:30 AM

I completely disagree with the last post. What you need to do to begin to protect yourself is have an attorney file a quick claim deed. Even when your wife refi's your home, you are legally still on title. Therefore she would have to Quick claim you off title and therefore you would lose all rights to the property.

To keep your best interest in mind, a real estate attorney can best help you. What I like about making sure you stay on title but not on the loan is that it provides you a safety net if she fails to make the payments. However, until your divorce is final, it protects any equity rights you may have in the home.

You have to move quickly on this if she has already started the refinance process. Keep in mind again, if you were on title the first time, with the first loan, she cannot just have you removed. You have to sign to be removed. So keep your eyes and ears open and most importantly, consult with a real estate attorney.

Good luck to you.

LisaB4657 · Dec 21, 2007, 06:46 AM

Sorry, life1973happened, but excon's answer is 100% correct, as usual. Good luck finding a lender who will allow the wife to refi while Al remains on the deed.

Why should Al have his attorney file a quit claim deed now? He's already on the title. Filing a deed will remove him from the title. Unless you're suggesting that he be removed from the title while she refi's and then put back on the title afterwards? That would be committing a fraud against the lender.

To the OP: If the wife wants to remove Al's interest she will have to pay him for it. This can be done as part of the refi. Let her refi the house in her name alone and use the money from the refi to pay him his share. Then he can give her a deed.

If she can't qualify for a large enough mortgage to pay off the old loan and pay off Al at the same time, then Al will have to remain on the title and sign the mortgage, but not the mortgage note. (This means that he's not personally responsible for paying back the loan but he agrees that the lender can foreclose if his ex doesn't pay the loan.) Then he has to hope that she pays back the loan and doesn't allow the house to go into foreclosure. His other option is to give her a deed and take back a second mortgage for his share of the house. Then he still has to hope that she pays her loan and doesn't allow the house to go into foreclosure.

What does his attorney say?

life1973happened · Dec 21, 2007, 06:59 AM

Lisa you are going on the assumption he is on title at all. For all we know he isn't which is one of the reasons I brought up the quick claim deed. I agree with everything else you state. However, She can refinance that home and get a loan in her name only. There are lenders who do that everyday. I closed one last week, in which the boyfriend put the loan in his name only. In this case the girlfriend was put on title, as they wished, but was not on loan.

Second, in know way am I suggesting he quick claim himself off and add it on again later. The question seemed more general giving us little to go by. WHich is why I gave him a broad sense of the terms used and some options.

Hopefully, with all of our answers, which sometimes we will see differently on, it gives somebody enough help to know where to start. We all seem to agree that he needs to speak to his divorce attorney and also a real estate attorney.

LisaB4657 · Dec 21, 2007, 07:06 AM

Originally Posted by life1973happened

Lisa you are going on the assumption he is on title at all. For all we know he isn't which is one of the reasons I brought up the quick claim deed.

The original post said "she wishes to remove his interest". That's a pretty good indicator that he's on the title.

And by the way, it's a QUIT claim deed, not quick.

I agree with everything else you state. However, She can refinance that home and get a loan in her name only. There are lenders who do that everyday. I closed one last week, in which the boyfriend put the loan in his name only. In this case the girlfriend was put on title, as they wished, but was not on loan.

Yes, she can get a loan in her name only. But he will still have to sign the mortgage to allow the lender to foreclose if she doesn't pay back the loan. Otherwise, how does a lender foreclose on half a house?

excon · Dec 21, 2007, 07:10 AM

Hello life:

Well, you've mellowed out a bit. That's cool. I agree with you that a compilation of answers often times gives the best result - as long as our resident real estate attorney, LisaB is PART of the compilation.

You say lenders do, what I don't think they do, every day. Lenders, of course, lent money without having a clue whether they'd be paid back or not. And I didn't think they'd do THAT. But I digress.

If they do what you suggest, please tell me how the bank protects its interest? Clearly, they're going to have a problem with the co-owner. He's not going to let them foreclose.

excon

ScottGem · Dec 21, 2007, 07:11 AM

The OP stated: "but he remains on Title". The question was about someone going through a divorce and protecting his interests. Therefore, the assumption is that the wife is looking to refinance the family home in her name only and the husband wants to protect his interest in the home. Frankly I don't see any other interpretation. Therefore, excon's and Lisa's answers make sense, Life's doesn't.

Why would a lender loan money on a property that the borrower doesn't have clear title to? That makes no sense.

This whole business should actually be covered under a divorce agreement. The agreement should state that the wife buys out the husband's interest. The wife can obtain her refi and at the closing, the husband gets paid off and quit claims the deed to the wife.

Fastfun1 · Dec 21, 2007, 10:38 PM

I have worked as a direct lender for Countrywide for the majority of my professional career. All the posts are partially correct. It boils down to this: Have the divorce decree finalized prior to refinancing the home. If there is enough equity available in the home and the borrower, exwife, qualifies for said loan, cashout the home to satisfy the divorce decree and quit claim OFF at closing. That way you have your money and no future interest in said property. However, you CAN refinance a home in just the wife or husbands name on the mortgage while both remain on title. Do not bother posting anything to say otherwise. I have personally done this dozens of times and it is legal. However, I would not go that route. This is my first post. HELLO ASK ME!:)

JudyKayTee · Dec 22, 2007, 04:51 AM

Originally Posted by Fastfun1

I have worked as a direct lender for Countrywide for the majority of my professional career. All the posts are partially correct. It boils down to this: Have the divorce decree finalized prior to refinancing the home. If there is enough equity available in the home and the borrower, exwife, qualifies for said loan, cashout the home to satisfy the divorce decree and quit claim OFF at closing. That way you have your money and no future interest in said property. However, you CAN refinance a home in just the wife or husbands name on the mortgage while both remain on title. Do not bother posting anything to say otherwise. I have personally done this dozens of times and it is legal. However, I would not go that route. This is my first post. HELLO ASK ME!:)

Do not bother to post otherwise?

This is not true in my area when banks are concerned (you cannot hold a mortgage in one name and title in two - the bank doesn't want the hassle if they have to foreclose); I believe Countrywide is a private lending institution so perhaps the guidelines are different.

What area are you in?

ScottGem · Dec 22, 2007, 08:07 AM

Originally Posted by Fastfun1

IHowever, you CAN refinance a home in just the wife or husbands name on the mortgage while both remain on title. Do not bother posting anything to say otherwise. I have personally done this dozens of times and it is legal.

First Welcome. Second, The advice of putting into the divore decree and cash out at closing (like I said) was right on. Third, no one is saying its not legal to have one borrower with two on the title. What we are saying is that its not prudent. If a default occurs this make it more difficult to foreclose. I strongly suspect that the loans you havde written that way are secondary mortgages (home equity loans) rather than primaries.

Fastfun1 · Dec 22, 2007, 08:09 AM

Originally Posted by JudyKayTee

Do not bother to post otherwise?

This is not true in my area when banks are concerned (you cannot hold a mortgage in one name and title in two - the bank doesn't want the hassle if they have to foreclose); I believe Countrywide is a private lending institution so perhaps the guidelines are different.

What area are you in?

I work in Michigan, but do business throughout the greater midwest; Ohio, Indiana, Illinois, under a blanket license assigned to my branch. I apologize for any commentary that may have seemed rude; my ego got the best of me. As mentioned earlier, I have closed loans with only one spouse on the note while the both remain on title. I have done this may times on prime, sub-prime and alt-a products. I have even gone as far as to refinance mortgages in only a spouse's name who was not previously on title; simply by quit claiming the spouse on; ensuring the recording date was prior to the loans submission to underwriting, and refinancing in only that spouses name. I cannot speak for FHA or VA. I cannot recall any circumstances of filling in only one name with Government products. Yes, Countrywide is a private lending institution and the majority of our fundings are internally funded through Countrywide Bank. I understand that guidelines and products will differ with lenders, be it banks, credit unions or private lending. I will regress and state that Countrywide, amongst other private lenders, can refi with one spouse on note and both on title; this may not be the case outside private lending. :)

LisaB4657 · Dec 22, 2007, 08:22 AM

Originally Posted by Fastfun1

As mentioned earlier, I have closed loans with only one spouse on the note while the both remain on title.

When you close a loan where only one owner is on the note, does Countrywide require the non-responsible owner to sign the security instrument?

Fastfun1 · Dec 22, 2007, 08:26 AM

Originally Posted by ScottGem

First Welcome. Second, The advice of putting into the divore decree and cash out at closing (like I said) was right on. Third, no one is saying its not legal to have one borrower with two on the title. What we are saying is that its not prudent. If a default occurs this make it more difficult to foreclose. I strongly suspect that the loans you havde written that way are secondary mortgages (home equity loans) rather than primaries.

Thank you for the welcome. The majority of my lending has been on first mortgages, with 2nds and HELOCs typically few and far between. Even in the case of 2nd liens or HELOCs, Countrywide requires the bank holding first lien position to grant subornation of their lien, putting Countrywide in a primary lien position. In a foreclosure proceeding, the bank can only foreclose those on the note of the home. In essence, both parties will loss the home, but only those who have signed the mortgage obligating them make timely payments to the lender will have there credit effected. Furthemore, mortgages are not like auto loans; once the home is foreclosed, that is the end of your relationship with the lender. The lender will not make any attempt collect any past due payments or unpaid balance of the principal. My only concern would be that if the spouse becomes delinquent on taxes or water, a lien will be placed on the home and effect the credit of all who are vested on title. So yes, it is risky but possible in the private lending sector. :)

excon · Dec 22, 2007, 08:29 AM

Hello again:

I don't dispute that any of this happens. We've had too many people here say that it DOES occur.

However, nobody has answered the question of how the bank protects its interests in such a situation.

If the borrower defaults, the bank is going to want to foreclose. As Lisa pointed out, they can't foreclose on the half that the borrower owns. They're going to want to foreclose on the entire house, and the co-owner is going to stop them. No? I don't see why the co-owner COULDN'T stop them either. THEY'RE not in default.

Please, splain it to me.

excon

Fastfun1 · Dec 22, 2007, 08:38 AM

Originally Posted by LisaB4657

When you close a loan where only one owner is on the note, does Countrywide require the non-responsible owner to sign the security instrument?

No. The non-borrower will only be required at closing to sign the new deed, as he or she is currently vested and no action, refi or sale, can take place without his or her signature. The non-borrowering spouse will hold absolutely no ties to Countrywide. :)

LisaB4657 · Dec 22, 2007, 08:43 AM

Originally Posted by Fastfun1

No. The non-borrower will only be required at closing to sign the new deed, as he or she is currently vested and no action, refi or sale, can take place without his or her signature. The non-borrowering spouse will hold absolutly no ties to Countrywide. :)

If both the borrower and the non-borrowing owner are already owners by a prior deed, then there would be no need for a new deed. In that case, does Countrywide require the non-borrowing owner to sign the security instrument?

Fr_Chuck · Dec 22, 2007, 08:45 AM

Why would she agree to a new loan, if she is not getting his name off the title, That is the reason for a new loan to start with.

This will be settled in court where the judge decides who gets clear title to the home and how.

Fastfun1 · Dec 22, 2007, 08:49 AM

Originally Posted by Fr_Chuck

why would she agree to a new loan, if she is not getting his name off the title, That is the reason for a new loan to start with.

This will be settled in court where the judge decides who gets clear title to the home and how.

I with you, FR and GEM. Handle in court.:)

Fastfun1 · Dec 22, 2007, 09:09 AM

Originally Posted by LisaB4657

If both the borrower and the non-borrowing owner are already owners by a prior deed, then there would be no need for a new deed. In that case, does Countrywide require the non-borrowing owner to sign the security instrument?

Lisa, I ran your question through our underwriting guidelines to be sure. The non-borrower is not required to sign a security instrument. Somewhere in this lengthy tread, I lost track of vesting. Of course no new deed per previous vesting. :) This web site is addictive, huh?