Former Home Owner Still Responsible For Gift Home's Mortgage

Added February 28, 2009 by Ilyce R. Glink

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Summary: If you give your home as a gift to relatives without checking to see if the mortgage loan is assumable, as the former homeowner, you are still responsible for the mortgage. The situation is worse if mortgage is still in your name but the deed is in the name of your relatives. As the former home owner, you are responsible for all the mortgage payments, and need to either refinance the mortgage in your relatives' names, or transfer ownership back to yourself.

Q: I gave a house to some relatives but I have not been able to get the loan into their name.

Now the mortgage company tells me the loan I have is not assumable. What am I supposed to do? The deed is registered in their name and I need the loan to be in their name as well.

This has been going on for almost a year. Can you help?

A: You've gotten yourself into quite a pickle: You've signed away ownership to your home, but you're actually still on the hook for the mortgage.

What you should have done was to have your relatives apply for a mortgage first (or found out if your loan was assumable) and then transfer the deed to your relatives after they secured financing.

I'm not surprised your relatives haven't been exactly helpful. They have no incentive to do anything. They own a house and could sell it at a moment's notice. You, on the other hand, owe thousands of dollars but have no ownership in the asset.

What you need to do now is work with your relatives to either refinance the mortgage, so it goes in their name, or transfer back ownership of the house into your name

Consulting with an experienced real estate attorney would be a good idea. You've got a lot at stake right now.

May 25, 2004.

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