removing name from debt

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My husband was previously married and they owned 2 homes together. When they got divorced , their names remained on both properties but they each were paying for the home they received in the agreement. No quit claim deed was done. His ex-wife now wants her name removed from the property we live in so she can refinance. We were planning on refinancing and now does seem like a good time. My question is : If her name is removed from this property ( the one we live in) and his name stays on the property she lives in, and she can't qualify for a loan on her own, what do we do then? I'm concerned we will be stuck with debt but no property.

howardnugent · Posted: Tue Nov 17, 2009 3:56 pm Post subject:

You're talking about 2 seperate items. The title (ownership) and the legal liability of the loan.

Typically you want to change both at the same time when you can. That can be done through a refinance and a quitclaim, which can happen simultaneously.

Alternatively, if your current loans aren't high enough for a refinance to provide any other real benefit. You may want to pursue a Qualifying Name Delete Assumption to move the names around. Even if the loan is not typically assumable, this process is typically available.

For example, if both loans are at attractive rates, then the ex-wife and your husband could begin the assumption process to remove each other from their respective loans. It could be done simultaneously so that each realizes the benefit of the transaction without risk of the other not performing.
The assumption process is much cheaper because an appraisal is typically not required, and there are no other closing costs. The only costs involved are a new title policy and recording fees. (These costs vary by state.)
You could also do a simultaneous refinance of both loans to accomplish the same thing if rates are truly attractive. A professional mortgage consultant can tell you what the break even period is on a refinance. (The length of time it takes to recover the costs involved through a reduced interest rate.)

Contact your servicer to discuss options.

gmakerley · Posted: Wed Nov 18, 2009 9:37 am Post subject:

color me skeptical about the assumption possibilities. i think refinancing is a far likelier outcome in each case. if the former wife cannot refinance for some reason, then your current husband would still be on the hook for payments (legally) on that loan on that house. however, since she's obviously been making payments on this and he hasn't been affected by now, odds are good he'll never have to sweat it in any event...have i read you correctly?

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