Q: I live in Philadelphia and my fiancé left me 6 days before our wedding. We own a home together and are both on the mortgage and deed. He wants me to sign a hold harmless agreement in order to get my name off the deed. I was told that I should not do this because it will not remove my name from the mortgage.
I have $2,000 to my name. We bought the house last year for $162,500 and owe $160,000. I am guessing that it’s worth about $145,000 now. I am terrified and don’t know how to come up with the money that we owe the bank. He is being unreasonable and will not talk to me.
He also claims that he cannot refinance the house since there is no equity in it. Is this true? He claims our only option is a short sale and that will damn my credit and I’ll never be able to get a place to live again. I’m currently displaced at my parents while he happily lives in our house.
What am I entitled to? I want this to be amicable but he is refusing. He has a lawyer, I can’t afford one. How should I proceed?
Thank you for your time and any help you are able to provide.
A: You’re being told some things that are true and some that aren’t. First, you are correct: you should not quit claim the deed to the property to your ex-fiancé because you will still owe the balance due on the mortgage. That name is your leverage to get what you want.
You ex-fiancé could refinance even if the mortgage is up to 125 percent of the value of the home. But if you are on the title to the home, he would need to get you to sign paperwork to allow the refinance to close. That would mean he could refinance up to $181,250, which is way more than you owe. The interest rate will rise on the loan, and he has to be able to earn enough to refinance it on his own.
If you do a short sale, the lender may look to your assets and your fiancé’s assets. If neither of you has anything, then you probably won’t have to pay anything else. If he has cash, then he may have to pay up. The two of you are on the hook for the entire amount of the mortgage, so if you can’t pay anything, and he can pay it all, he’ll have to. After two or three years, you’ll be able to buy another house, even with a short sale on your credit history.
If your fiancé doesn’t want to do a short sale and doesn’t want to refinance, but wants to continue to live happily in the house, then fine. He should pay the expenses and you can stay on as his silent partner. This may hinder your ability to buy a house someday (because of the debt-to-income issue) and you will still be tied to him. If he decides to screw you and stop paying the mortgage, your credit will be damaged as well.
As an owner of the home, you need to make sure the home is insured. If someone gets hurt at the home and they decide to sue the “owner” that would mean your ex fiancé and you would be sued.
While you say you can’t afford an attorney, I’m telling you to take your $2,000 and borrow more if you need to and get the legal representation you so desperately need. You must find a great real estate attorney who can help you negotiate an end to this situation one way or another.
My suggestion would be to allow your ex-fiancé to refinance the property on his own so you’re not on the hook. At the closing, you can agree to sign over the title to the property – and then you’ll be done with him. But you need to make sure that you know what you are signing. You should only sign over your ownership interest in the home to him (using a quit claim deed or other appropriate deed) when you know the mortgage has been paid off.
Find a super-smart attorney who can give you the help you need, so you stop letting your ex-fiancé walk all over you. You might try a legal aid society for some help. These days, some law firms are offering their legal services to the community to keep their people busy. You might be able to find someone to help you out as you struggle to resolve the issues with your ex-fiancé.
Good luck – let me know what happens.