Mortgage Loan And Title Have Different Names

Added July 1, 2005 by Ilyce R. Glink

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Summary: When you get divorced you likely have to work out who will keep your home and pay the mortgage. It's not a good idea to have someone pay the mortgage whose name is not on the mortgage loan. It's possible in that situation that the person making the mortgage payments will decide to stop and it will negatively affect the credit of the person whose name is on the mortgage loan. The names on the mortgage loan documents and the title to the house should match.

Q: I have an urgent question. My ex wants me to sign the quit claim deed to the house so he can refinance the property in his name. Currently, on the loan paperwork, I'm the only one financially responsible for the house but both our names are on the title.

He refused to sign a quit claim deed turning the property over to me, and became quite delinquent on the payment resulting in the house's current foreclosure status. I have not resided in that house since September 2004.

I'm afraid if I sign the deed, then I'll be completely in the hole. As it is, he has destroyed my great credit rating. What should I do? Please help as soon as possible.

A: You're in a tough position: Your name is on the loan but your ex's name is on title. He has ruined your credit and now wants you to turn over ownership of the property. You're right -- you will be in the hole if you do this.

You've already made several costly mistakes here, including failing to insist that your ex be listed on the mortgage in the first place, giving him partial ownership of the property without insisting on financial responsibility and then, finally, moving out of your home before you and your ex settled the ownership issue of the property.

Other mistakes include failing to make up the missed payments on the property after your ex fell behind. After all, it's your credit history on the line -- not his, as you've now discovered.

Now, you've got to salvage whatever you can from this mess. If your ex waits much longer, the bank will simply take over the property and kick him out.

Since your credit is ruined already, you may feel like this is simply payback time. But, you're the one who is being hurt since your name is on the loan.

You also need to recognize that you're the financially responsible party in this relationship. Call your mortgage lender's loan mitigation department and have a frank discussion with them about whether the property can be brought out of foreclosure (it may be too late). Ask if you can forestall foreclosure proceedings and put the house up for sale. Then, hire a top agent and stick a "for sale" sign in the front yard.

While your ex can refuse to sign the papers, you can sue him to force the sale. And you should. All of this is unpleasant and your ex sounds like a complete jerk (probably why he is an "ex"). Still, you have to exert some control here and take charge of this situation.

I should mention that there is one other option. If your ex wants to pay you whatever equity is in the property (or a portion of it), you can sign a quit claim deed to the property. However, do not agree to do this until he is at the closing for the refinance with a reputable lender. You can go to the closing and as it is happening, you can, as part of the process, sign and notarize the quit claim deed. I suggest you have an attorney represent you so that you'll have some firepower in case your ex pulls any last-minute stunts.

My concern is that your ex, being the kind of guy he is, is asking you to sign the quit claim deed so that he can sell the house out from under you, and keep whatever equity remains.

Perhaps I'm just a bit jaded, but given his track record, you'd be wise to assume the worst -- and perhaps be pleasantly surprised.

July 1, 2005.

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