How do I remove spouse from loan without refi or assumption?

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Icon Mini Profile friedmanryan





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Post Posted: Sat Jul 04, 2009 11:05 am    Post subject: How do I remove spouse from loan without refi or assumption?
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Hi.

Is there a way to remove my soon-to-be-ex spouse's name from the mortgage without refinancing or assuming the loan?

Quick Overview of Situation:
    I may need to do a short sale, and I don't want both of our credits to suffer. Just mine will be fine.
    We will most likely not profit from the sale of the home due to a declining market. We have agreed to split any proceeds from sale (completely amicable, not an issue).
    I don't believe a refi is an option for three reasons: 1. We have no equity, 2. I have no money for closing costs and 3. If I refi, I fear I would then not qualify for an immediate short sale, and I might be stuck with the house for some time longer than desired.
    Assumption is time consuming and costly, and I would rather avoid this option.

So I bring us back to my initial question - is there any way to remove her name from the loan so that I can short sell the home if necessary?

Perhaps a better question would be - what is the best way to go about this?
Icon Mini Profile jenkin7





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Post Posted: Mon Jul 06, 2009 1:08 am    Post subject:
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Hi friedmanryan,

A refinance is the best option in situations like this. But refinance is not possible in your situation because of the reasons you have already mentioned. Thus, it is difficult to remove your ex-spouse's name from the loan. The only other way is a novation agreement. Nevertheless, not many lenders would want to take a co-borrower off the loan through a novation in this market. Considering the depression in the economy and the loss of jobs, the lenders do not want to take a co-borrower off the loan, unless they are perfectly sure of the other borrower's ability to repay the loan.
Icon Mini Profile friedmanryan





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Post Posted: Mon Jul 06, 2009 9:36 am    Post subject:
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Thanks for the response!

I spoke with Wells, and they do not do a novation. In fact, nobody there even knew the term. They have an Intranet Glossary of Terms, and it doesn't even exist in there. I'm willing to bet that an "assumption" is the same thing.

You're right, the refi doesn't seem to be an option. The LTV ratio is about 98%, so there would definitely be closing costs.

I fear my best bet is the assumption - the biggest issue there is timing and the cost. It will take roughly 70-90 days from the day that I can submit the official divorce decree (late August). The cost is anywhere from $600-$1000 with the title removal and everything.
Icon Mini Profile savior70





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Post Posted: Tue Jul 07, 2009 5:31 am    Post subject:
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Hi

I'm afraid you aren't left with many options in the situation you're in. As Jenkin had mentioned refinance could have been the best option. But in your case, that isn't a possibility. The only other option for you is, to assume the mortgage. It may take some time and cost you some dollars. But there isn't really any other option available for you to remove your spouse from the loan.
Icon Mini Profile gmakerley
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Post Posted: Tue Jul 07, 2009 8:06 am    Post subject:
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novation is a word i first heard on this site - within the past 2 years. despite my having been in this industry for longer than many have been on the earth, i had never heard mention of such a thing before.

i am not surprised that wells does not do novation. i would, frankly, be surprised if there are more than a handful of companies allowing this in the current economic times. removing a borrower from a loan is never going to be a benefit to the lender, and i have to surmise that lenders (who are ever more conservative on a moment-to-moment basis) are extremely opposed to such a policy.

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Post Posted: Thu Apr 08, 2010 3:16 pm    Post subject: What do I do when husband just died?
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I may not qualify for an assumption, Bank of america says refi or qualify for assumption. If I don't qualify, what then? He is dead and can't be used now.
Icon Mini Profile gmakerley
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Post Posted: Thu Apr 08, 2010 8:39 pm    Post subject:
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stella, if you cannot qualify for either a refinance or an assumption, you'd have to continue making payments on that loan as is...no changes in rate, term, etc.
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Post Posted: Tue Mar 27, 2012 8:40 am    Post subject: Removing a spouse from mortgage doc. if not on note
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Im going thru a divorce wive has agreed to quit claim deed her name is on mortgage document but not on note i am sole borrower . the house is under value cant refi. What can i do ?
Icon Mini Profile jameshogg
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Post Posted: Tue Mar 27, 2012 10:56 pm    Post subject:
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Hi Leon,

If you're the sole borrower of the loan, then you don't have to refinance it after the divorce. You need to get the property transferred in your name from your wife. The quitclaim deed will serve your purpose.

Thanks
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