Q: I have a question that has been burning at me since my divorce three years ago. If I file a quit claim deed on the home that I lived in when I was married will this relieve me of any harm towards my credit?
As of now, my ex-husband is three months behind on the house payment and it has been hurting my credit since the divorce. He was supposed to refinance and completely take me of the loan.
He didn’t. And, now my credit is in the toilet.
A: Unfortunately, it’s the mortgage that’s causing damage to your credit report, not the house itself.
When you bought the house, you signed a note and a mortgage to the bank with your then husband. You each promised to pay the entire amount due every month. When you moved out and got divorced, you should have forced your soon-to-be-ex-husband to refinance your loan.
When you stayed on the loan after your divorce was final, you were asking for trouble. The divorce decree governs your relationship with your ex-husband. And while that document may make your ex-husband liable for the payments on the mortgage, that arrangement is between you and your ex-husband. At issue is your relationship with the lender. In most cases, the divorce decree doesn’t wipe out your continuing obligation to make sure the loan gets paid.
The only sure way to make sure an ex-spouse can’t harm your credit in cases where you are both obligated on a mortgage is to sell the home and pay off the debt or force the person that remains in the home to refinance the loan during the divorce,before everything is settled.
If your ex-husband is three months behind on the mortgage payments, your credit is shot. What you need to do now is check your credit history and pull a copy of your credit score. You can do this at annualcreditreport.com, which is the only website supported by the three credit reporting bureaus, Equifax, Experian, and Trans-Union.
Once you assess the damage, you can decide what you want to do next.
Your first option is to contact the bank and arrange to make up the missing payments and bring the loan current. If you can’t afford that or don’t want to do that, and your ex-husband can’t afford to pay, then the property can be sold in a short sale (where the bank agrees to take whatever the house sells for, even if it is less than what is owed), a deed-in-lieu of foreclosure (which is slightly less damaging to your credit than a foreclosure) or a foreclosure.
Unfortunately, all of these options (other than bringing the loan current) will further damage your credit.
Has your ex-husband tried to get a loan modification? He can find out more by calling toll-free (888-995-HOPE) to speak with a HUD-certified housing counselor.
I wish I could tell you that simply using a quit claim deed would solve your problems. But it would actually leave you in worse shape than you are in right now.