How to remove name from mortgage loan!

28 Replies

My ex and I divorced back in 2012 and I did a Quit Claim Deed leaving him the house. My name is still on the loan tho. He recently passed away and the new girlfriend is going to stay in the house and said she would make the mortgage payments. My question is how can I get my name removed from the loan in case she decides to quit making payments? I have my own home and a new life now and just want to put this part of my past behind me. Any suggestions are welcome.

This is a question best answered by a licensed attorney in your state. That said, a loan is a contract between multiple parties that, in order to be changed, must normally be done with the consent of all interested parties. This would typically require a loan refinancing, and the loan company consenting to the refinancing. One other option is Bankruptcy, which is a horrible idea for an investor. Either way, seek counsel.

To get your name off the note, the loan will have to  be refinanced by the person actually making the payments.  since the girlfriend is not actually on the title, then she will have to get a purchase money loan to buy the property from your ex's estate.  If you do nothing, and the girlfriend decides to quit making payments, the lender will foreclose and name you as the surviving defaulting borrower.

I have a question for anyone who may know the answer:  Can someone who is on the mortgage file a quit claim deed that actually means anything?

@Randy E. - as far as I know, a quitclaim deed will release your ownership interest only.  It won't change responsibilities of the named borrower.   All the financial liability - no ownership! 

It's common in divorces and sad to see the poor ex that got the terrible advice to give up their ownership without first getting off of the loan through a proper refinance.

Originally posted by @Steve Vaughan :

@Randy E. - as far as I know, a quitclaim deed will release your ownership interest only.  It won't change responsibilities of the named borrower.   All the financial liability - no ownership! 

It's common in divorces and sad to see the poor ex that got the terrible advice to give up their ownership without first getting off of the loan through a proper refinance.

I know several couples that got divorced between 2008 and 2011 in this exact scenario.  Divorce papers say that the person keeping the house will refinance "as soon as possible" to get the other person off the loan, but then the person leaving is told to quit claim the house.  Everybody was under water, one guy was unemployed - so, so, so many issues.  

Divorce is crappy enough without trusting that somebody who used to love you, but now probably hates you a lot, is going to make sure it all works out ok for you.  

One woman I know can't buy a house because her DTI still includes the marital house where she still is on the mortgage, but not on the deed. Ex-husband says the interest rate he's got is too good and he doesn't want to refi to a higher interest rate. She tried to take him back to court to get her divorce decree enforced for "refi as soon as possible" and the judge had no idea what to do with that language. Judge basically said that sure, it's possible for the guy to refi, but is he actually compelled to put himself in a worse financial situation in order to satisfy the terms? The judge's answer was No, he is not compelled to do so.

Clearly too late for the OP now, but for anybody else reading - if you're getting divorced and find yourself in this situation, don't quit claim the house.  Make sure your divorce decree has a specific timeline such as "within five years" or "when ex-spouse is able to qualify for a refi" or "when there is 20% equity in the house".  You have to attach a specific, measurable event to it.  You can then sign over your rights to the property either right before or at the refi closing.  To be fair (if you care about that), you can make sure your divorce decree attaches the two issues together.  

Of course, if you don't quit claim, you can be held responsible for unpaid property taxes, uninsured accidents and unpaid municipal fines.  

Long story short - divorce sucks.  

Medium cluebussol logo3inLinda Weygant CPA, Clue Business Services, Inc. | [email protected] | Podcast Guest on Show #244

Thanks @Steve Vaughan and @Linda Weygant .  My first uninformed assumption was that there was no way the legal system would free her from ownership if she was responsible for the mortgage.  But now, if what you two say is true, another question comes to mind.

The ex-husband was on the mortgage and the deed.  The ex-wife is only on the mortgage.  Now that the ex-husband has died a single man (who may not have had a will,) who "owns" the house now?  If the ex-husband died intestate, single, and childless, can the ex-wife make a claim on the house she is legally responsible for paying for?  Or, if the ex-wife and the ex-husband had children together, does the ex-wife now control the property through being the parent of a minor child who inherited the house?

I know these are legal questions and you two may not be able to expertly speak on them.  I'm just curious about any anectdotal answers or hopefully legal (specific to state, of course) answers to some of these possibilities.

Surely, without a will there is no way the current girlfriend has a legal right to maintain residence in the house.  I can understand that because of how the divorce was written, the ex-wife could not initiate a sale of the house while the husband maintained possession of it.  However, now that he is deceased, it seems there ought to be some way she can now initiate a sale of the home.  Or at the least, now that the ex-husband is deceased, she ought to be able to force a refinancing by whomever is the current legal deed holder.

@Randy E. - I wish I was experienced and qualified to provide a quality answer for you.  I can guess what a judge may do or whatever, but I would think she would have more of a claim to force a sale than the gf currently in possession.  She is responsible for the debt, after all.  Just a guess and I know little about this.

I will try and ping some help, but not sure if they work in probate specifically:  @Jeff Miller,  @Jerry W. ,  and the allstar probate investor I can't think of, dangit!  Thank you Jeff and Jerry for taking a look!

@Randy E. - all great questions and I'm not qualified to answer any of them.

However, thinking out loud...  I would not be so sure that the girlfriend does not have some right to the house.  She's definitely established tenancy, so I would think that she can't simply be booted out.  If she's established some type of equity in the house - through paying the mortgage, repairs or upgrades specifically through her account OR by the fact that she and the original owner had joint finances and she contributed to that account with her own income, she may be able to make a claim as a spousal equivalent, depending on the state she is in.  

Before same-sex marriage became legal across the land, some states (MA, NH, DE specifically, I think, but I could be wrong) enacted legislation to protect unmarried same sex partners in this exact situation and it applies equally to unmarried hetero couples as well.

However, children - particularly minor children - have some protection here as well and a court would not necessarily ignore them in favor of an unmarried partner, particularly if the house was the sole asset of the decedent.

A married spouse usually receives all assets of the decedent and if the girlfriend can claim common law (or if it was already established prior to his death) through the state they were living in, she could receive it all.

That said, I do not believe the mortgage company will permit a dead person to remain on a mortgage once probate is settled, so the house would have to move into a trust or to somebody else's name and the ex-wife would then be able to remove her name from it and move on.

So yeah - I'm thinking out loud, but the above are all issues or question I would ask a SUPER COMPETENT attorney.

Medium cluebussol logo3inLinda Weygant CPA, Clue Business Services, Inc. | [email protected] | Podcast Guest on Show #244

Definitely consult an attorney.  

It seems his estate should be selling the house, whether it is to the girlfriend or a 3rd party.  Is their equity in the house?  It is a bit of a strange situation if there isn't equity in the house, but there are other assets in the estate.

Thank you to all who responded. When we divorced we didn't use a lawyer we didn't want to spend extra money when we were agreeing on everything. Someone did give me the advice to get a quit claim deed in order to be able to purchase another home. My ex did have a will which was leaving the house to be divided between his son and girlfriend. When we did try to refinance just in his name a year ago the bank wouldn't because of his credit. The lawyer who did his will said no matter what keep it out of probate. I am going to be seeking legal advice to protect myself in whatever way I can. 

@Amy Veldkamp , I can only tell you what would happen in my state, it might be different in your state, oh and AAAAA!!!!!!!!!!!!!!!!  Wow, big mess.  First, there must be a will in order for girlfriend to have any right unless it is a common law marriage state or palimoney state like CA.  It gets even more complicated by having 2 new owners, son and girlfriend.  If one of them has bad credit it could be real bad.  Does your divorce decree even mention the property?  As to no probate that seems like really bad advice.  In order to transfer the property from ex husbands name to GFs name it takes a court order since real property is involved.  There is no magic fairy dust you need a court order since owner of record is dead.  Now there is a law that prevents a bank from foreclosing just because owner died.  So that is not an issue.  You may have to file a claim against the estate to enforce your right to have the mortgage removed from your name.  It is like a creditor claim.  He owed you something, if you do not make a claim you will lose that right.  You could even argue breach of contract and ask to have the quitclaim deed set aside because he did not perform his part of the bargain.  The problem is that agreements affecting real estate must be put in writing because of the statute of frauds, however you have detrimental reliance as a possible equitable claim to by pass that.  I know this is confusing, but what it means is that it needs to be probated and you need to file a claim.  If your claim is rejected you must file a lawsuit over it rather quickly.  The end result is the judge can do whatever he wants because there are so many equitable arguments.  He will have a headache over this one.  Bet you are still happy over saving a few hundred bucks by skipping the lawyer.

My advice is to meet with girlfriend and son and try to have them refinance.  Check what is owed on it compared to its current value to see if it has equity.  Sometimes if 2 parties own a property and one wants his money from it now, there can be a partition action done to split it or if it cannot be split, then the court will order it sold.  Bad part is that son and GF have no skin in the game if the mortgage goes into default, so be nice to them, you don't want them getting mad and walking away.  If there actually is a default you could file a lawsuit to get ownership of the property.

@Amy Veldkamp

If your ex was the only named person on the deed, then your ex's estate owns the house. I am not aware of any bank that will lend on an estate property that has not gone through probate.  The house has to go through probate before heirs can be placed on title.  A will does not avoid probate, but rather, it is the will that is probated.  If the house was titled to two people "with right of survivorship", then title to the house can pass to the surviving owner without going through probate.

When you say "his" son, are you talking about a minor child?  Are you the child's mother? If the son is a minor, the probate court will probably place the house in trust with the son as a beneficiary and the child's guardian (if not named by the will, then appointed by the court) will most likely become the trustee.

If you do consult an attorney, I suggest you go to someone other than the attorney that did the will.

Somebody will get a house and the ex wife will have to pay for it .

She needs to Buy it.   You are correct.  You would be liable for any debt that she doesn't pay.   It's cheaper and less of a headache if you tell her she must purchase it and give a time line (within 60 days) to list it for Sale.   

If she defaults now she would have later anyway

Thank you Jerry and Dave. This is a bit of a mess I'm in. The son is not ours and he is in 40's like me. We did not have any children together. My ex was 26 years older than me. I did get my ex to get a will in place luckily. He left them the house to split between them and the lawyer that did the will said really he can't will something that he doesn't really own which is the home. The bank technically owns it still. There is still about $91,000 left of the loan and the property value in the town has gone down and as of right now the home is worth about $62,000. The son does not plan on moving into the house therefore he is fine with letting the girlfriend stay there and make the mortgage payments. The girlfriend is the sister of the son's wife's mother. Hopefully this doesn't turn into a huge mess? There is no way either can refinance. The girlfriend is still legally married and her name is on the mortgage with the husband with whom she has been separted for 5 years or more? I am going to seek advice of another lawyer for sure. I just don't want them coming after me to pay with money I don't have since I have my own home. There is no way I can pay on two!! I just want to be released from any liability. In our divorce papers my ex was awarded the house and all that goes with it. 

@Amy Veldkamp

Unfortunately, you did not get released from liability for the loan.  A quit claim deed can only take your name off the deed, but not off the loan.  Unless the property is in a state where residential loans are non-recourse (such as CA), you are personally liable for the balance of the loan in the event of default.

If the attorney told you that the ex can't leave the house to his heirs because he does not own it, then the attorney was definitely off base.  Your ex DOES own the home (his name is still on the deed even though he is deceased).  He pledged the home as collateral for the loan that was used to buy the home.  The bank does not own the home (technically or otherwise) until they foreclose and then take title by power of foreclosure.  The bank does have a lien on the home which means that they are first in line with their hand out when the proceeds of sale are distributed.

I am concerned that everyone named in the will is behaving as if they owed the property.  Your ex still owns the property, or rather, his estate still owns the property.  Only the personal representative of the estate, appointed by the probate court, has any power over the property before the house is deeded to heirs under the terms of the will.  If the will was never presented to the court for probate, then that needs to be done before anyone can buy or refinance the property to release you from liability for the loan.   Who was named as the executor or administrator of the estate in the will?  That person needs to get the probate ball rolling.  BTW, probate does not release you from liability for the loan balance either.  Probate only puts heirs on the title and removes the name of the deceased from title to the property.

You guys can speculate to your heart's content, however a secured lender is not going to removing anybody's name from a mortgage, trust deed or other security instrument.

Interlocutories and dissolution orders have the power to separate, bifurcate, liquidate and bifurcate assets but not dictate that a federally insured loan will not remove a debtor's name from a DOT or mortgage.

I pioneered the business of making mortgage loans to estates decades ago. I know this area. Absent a Federal judge forcing the issue, lender us not going to remove anyone's name whether they are currently on title or not.

Part of the issue has to do with the beneficial interest (ownership) of the loan and the likihoid if it being owned by a securitized pool as opposed to a single individual, lending entity or similar interest. 

Don't waste your time trying to do this. If it goes to sale, get your creditor letters in order to explain the derogatory foreclosure if/when it goes to sale. 

Sadly, I must agree with @Rick H. here. While it would seem fair and equitable that during the course of a divorce agreement, one party agrees to give up their equity (quit claim) and therefore should be excused from any further obligation when the other party agrees to make payments and acquires the rights to any equity in a property, this is not the reality. When you sign a note saying you owe a certain amount of money, giving up your equity position in a property does not relieve you from your obligation on the note. Sorry, too many big words from having worked in the mortgage industry for a long time. When you sign a contract saying you will pay so much per month for so long, or pay off the balance in full, just saying you want nothing to do with it any more and giving up ownership doesn't mean you don't owe the money. Think of it as buying a car and getting a loan on it. If you were to cancel the insurance (just to take that out of the equation) and then got in a crash and totaled the car, you couldn't just give the car back to the bank and say you didn't owe the money anymore. Won't work. Also a good reminder for all that if you co-sign a loan for someone, if they stop paying, you owe the money. Doesn't matter that the car etc is not something you own. You still owe. Same way you would go after a cosigner for someone renting your house or apartment. Just because they weren't the one living there, it doesn't mean you won't go after them for rent.

Yes, this is a big mess for you.  I think that listening to people other than a lawyer from the state where the property is located, and not engaging your own attorney, is what got you into the situation in the first place.  

Saving a few hundred bucks could cost you tens of thousands and your credit rating.  I would find an attorney who is well versed in estate matters and real estate both.  Assuming the property is in Indiana, find a good attorney there.  Don't try to skimp.  Good attorneys who really know what they are doing are worth their weight in gold.  

Medium small logoAnn Bellamy, Buy Now, LLC | 800‑418‑0081 | http://www.buynowhardmoney.com | Podcast Guest on Show #9

Legal Disclaimer: I am a licensed Mortgage Originator in IN, FL, OH anything I say may not be applicable to other states. NMLS#1157855. You are not getting out of the mortgage and you have relinquished your rights. But you kept all your responasabilities and liabilities. The estate needs to have the heir or the owners as designated by the probate court refinance the loan which can be done and does not require a purchase money loan.

Get a Real Estate/Probate Attorney involved now. If she defaults she walks away with out injury you on the other hand suffer all injury.

Unless the property was willed to her she is a squatter and has little if any legal rights beyond normal tenant eviction rights. Get an attorney. Get the property sold off or the heir to refinance ASAP.

If you ever get divorced never agree to a quit claim deed till the other party closes a refinance removing you from the loan. This quitclaim is best done at their closing.

Demand a must refinance or sell by date as part of your divorce agreement.

With any divorce demand specific dates for everything; ambiguity allows them to cost you money.

The home of my ex is located in Illinois and I live in Indiana. In the will my ex did leave the house to his son and girlfriend. The son is executor if the estate and if he can't fulfill his duties I am named the secondary. 

Hello Amy, Where is this property in IL. which town and which county. I invest in IL and if your property is in the county or towns we invest in we can try and find some solution Let me know.