by Brian Brady
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
This came in today:
My Mortgage Broker told us; because of my low credit score (Low 600) and my husband’s higher score (High 600) — he wants to not include me on the mortgage, but put me on the title as a owner. This would mean the mortgage will not show up on my credit.
Can this work? If so, what are the pros and cons???
That sounds completely plausible. I would caution you that your addition to title is most likely post closing. If so, your husband would be technically violating the loan covenant he signs with the lender. It’s not a violation that is going to end him up in jail. A technical violation could result in default, which could start the foreclosure process.
Your husband on the loan (and title) will most likely give you a loan with better terms, Excluding you from the loan may be the best option at this time. My advice would be to proceed with the mortgage broker’s recommendation, attack and cure the issues which affect your credit score, and petition the lender to add you to the loan at a later date.
JeffX says:
Good advice Brian…
Here’s a Pro: Wife gets 50% of ownership and 0% liability 😉
June 12, 2007 — 8:38 pm
Brett says:
Brian, what if things were reversed. I purchased our home 4 years ago in my name only. 2 yrs later I quit claimed the home into wifes name. 6 mo. later my wife refinanced house in her name, thus, removing me from the loan and the title. Now I have no liability and no ownership. Did we violate any laws with what was done?
June 12, 2007 — 10:30 pm
Brian Brady says:
“Did we violate any laws with what was done?”
I don’t think so, Brett. Your wife was on title for six months so she was allowed to refinance into her name. Understand, Brett, that I am not an attorney and not privy to your state’s laws.
From a lender’s perspective, it sounds kosher to me.
X-Man,
I forgot to mention that glaring benefit to the wife.
June 13, 2007 — 6:22 am
Jason says:
Is it ok to put my wife on the title (she is presently a non-citizen) on the initial Uniform Residential Loan Application although not place her on the loan as a borrower?
April 5, 2008 — 11:22 am
Brian Brady says:
Most likely not, Jason.
You can add her to tile, post closing, but read my caveat in the post. You won’t go to jail for doing it but you will be violating the loan covenant.
April 5, 2008 — 11:55 am
JeffX says:
and you gave up 50% ownership while maintaining 100% of the liability 🙁
April 5, 2008 — 12:02 pm
wfh says:
So if wife on mortgage, but not on loan, is she responsbile if the husband defaults on loan?
August 14, 2008 — 12:56 pm
Anonymous says:
I am on the home owner’s title but not on the mortgage or any loans…What is my financial liability if this home goes into foreclosure if any?…Taxes?
September 14, 2008 — 11:59 am
Brian Brady says:
I am reasonably certain that your liability is nil. Foreclosure laws vary from state to state. If you can tell me the state, I can research it and give you a more definitive answer.
September 14, 2008 — 12:37 pm
Paulie says:
Similar situation as Brian. I am in MD. 10 years ago my wife and I bought a house, both on the title and both on the loan. We refinanced 3 years ago, but my credit was not stellar at the time (~640). So my wife (who didn’t work at the time), refinanced our loan with a non-doc ARM since her credit score was around 720. She is the only one on the MTG, but we are both on the title.
Do we have any options/leverage to pursue in negotiating with the bank to lower out debt/payment levels?
September 22, 2008 — 12:58 pm
Brian Brady says:
“Do we have any options/leverage to pursue in negotiating with the bank to lower out debt/payment levels?”
Paulie, I think your wife needs to petition the bank for a “workout”. That’s about the only option I see you having
September 22, 2008 — 4:59 pm
m says:
What happens if the mortgage company finds out there has been an amendment to the title? If they allow the note to come due because of the agreement violation would a quit claim prevent a foreclosure?
October 13, 2008 — 7:25 am
Brian Brady says:
“What happens if the mortgage company finds out there has been an amendment to the title?”
They could call the loan due.
“If they allow the note to come due because of the agreement violation would a quit claim prevent a foreclosure?”
No.
October 13, 2008 — 9:29 am
Joe says:
What about the other way? We’ve heard that my mother-in-law is not on the title…but is on the loan?
We’re researching to find out it that is truly the case.
November 13, 2008 — 9:34 am
robin says:
Brian, on Sept. 14th, Anonymous asked, “I am on the home owner’s title but not on the mortgage or any loans…What is my financial liability if this home goes into foreclosure if any?…Taxes?” I live in AZ and am going through a divorce. My husband is on mortgage, but not me. I am only on title. He wants to foreclose, I don’t. The mortgage is current. We have never been late on pmts. If it forecloses, will my credit be affected? Can the lender come after me? I have always paid the mortgage online w/a joint checking account, usually w/my name on the check. On Deed, it states, as community property w/rights of survivorship. Please help.
November 29, 2008 — 1:23 am
Greg Swann says:
Robin:
> If it forecloses, will my credit be affected?
My guess would be no. Brian?
> Can the lender come after me?
No. They’re not pursuing default judgments in Arizona in any case. Your husband may have a tax liability for the unpaid balance, but that’s a question for a tax professional.
But: If you want to retain the home, and if keeping it makes sense for you financially, you might be able to get the lender to “nominate” you on the loan — to put the loan in your name instead of your husband’s.
Chances are you have virtually no equity, so what you would be doing is letting him skate away from wrecking his own credit. But lenders are negotiable like never before. It can’t hurt to ask, if this is what you want.
I am an Arizona real estate broker. You can follow up with me privately if you like. But take a hard look at your finances. Your credit probably will not be affected by a foreclosure, and you might be able to rent a comparable home right now for a much smaller monthly payment. Divorce is always a financial disaster, and keeping the home might simply delay the foreclosure and put it on your credit instead of your husband’s. Spending a few hundred bucks on a financial planner might make the best sense of all.
November 29, 2008 — 9:51 am
Brian Brady says:
Hey, Robin,
Foreclosure in Arizona, is typically non-judicial (as Greg points out). This means that the lender would file a Notice of Default, and then a Notice of Sale, against the signer of the note and Deed of Trust.
I have heard cases where if the loan covenant is violated, the NOD and NOS are filed against the deedholders, which is, in my limited opinion illegal.
The short answer to your question is that your credit should not be affected by a foreclosure if you aren’t named on the Deed of Trust. The long answer would be summarized with this advice:
Guarantee that the forclosure won’t affect you by investing $500 in a good real estate attorney.
November 29, 2008 — 1:39 pm
Ray says:
My wife and I own a home in California and we are both on title. The first mortgage is in her name only and the 2nd is in both our names. We tried getting a loan workout with our lender but that did not happen. Next, came the notice of default, then a date for the trustee sale. Prior to the auction date my wife filed a chapter 13. In the event my wife’s Chapter 13 plan is not accepted and she converts to a chapter 7, since I am on title, if I file a chapter 13 prior to the new trustee sale, will that postpone the auction date again untilmy Chapter 13 case is settled? We’re hoping we buy enough time to see the cram down legislation pass.
January 17, 2009 — 5:39 pm
Skot says:
I had question about mortgages and title. I live in florida and was wondering if I could be on the title (solely) and have someone else on the Mortgage. For instance, my parents agree to take out the mortgage and deed the title to me. I know it sounds implausible that someone would do that, but is it possible/legal? Thanks
February 25, 2009 — 1:27 am