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    dilenma25's Avatar
    dilenma25 Posts: 1, Reputation: 1
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    #1

    Jun 29, 2008, 04:09 PM
    Mortgage and quit deed
    I have a mortgage and I add a person do my quit deed (after I got a mortgage), I heard that I have to let the mortgage company know about the new addition to the deed. How illegal it is if I don't and what the consequences are? Please help!! Thanks.
    JudyKayTee's Avatar
    JudyKayTee Posts: 46,503, Reputation: 4600
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    #2

    Jun 29, 2008, 04:54 PM
    Quote Originally Posted by dilenma25
    I have a mortgage and I add a person do my quit deed (after I got a mortgage), I heard that I have to let the mortgage company know about the new addition to the deed. How illegal it is if I don't and what the consequences are? Please help!!! thanks.

    If you search the past postings you will see the LisaB4657 - the local expert - posted this in answer to this same question:

    "Sure, they can quit claim. They don't have to get anyone's permission. But if they do any kind of transfer without the lender's permission then they run the risk of the lender finding out and then activating the "due on sale" clause.

    A transfer of the property does not extinguish the lender's first lien. Whoever ends up with the property takes it subject to that lien. If the loan isn't paid then the lender can foreclose regardless of who the current owner is."

    And Lisa knows her real estate law!
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,301, Reputation: 7692
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    #3

    Jun 29, 2008, 05:16 PM
    Yes, as noted the mortgage company can merely require you pay the mortgage in full, it will void the terms of the mortgage, if you don't have the ability to pay in full, they can foreclose on you for doing this.
    LisaB4657's Avatar
    LisaB4657 Posts: 3,662, Reputation: 534
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    #4

    Jun 29, 2008, 05:34 PM
    Thanks, Judy! I just want to add something.

    It's not "illegal". It's just that when you add someone onto your deed it is most likely a violation of the terms of the mortgage and it activates the "due on sale" clause, which means that the mortgage loan becomes due in full immediately. However if you have been making your mortgage payments regularly and on time it is unlikely that the lender will take any action.

    So your options are (1) tell them and ask them to add the new person on to the mortgage, which they will probably do as long as the new person doesn't have horrible credit; or (2) don't tell them, keep paying the mortgage payments on time and hope that they don't find out.
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