How do I remove myself from a mortgage?

August 3, 2009 6:16 AM

How do I remove myself from a mortgage?

So I feel like a dork for asking this, but I don't even know where to start! I went through a divorce several years ago. My wife got the house. That's fine, but I just recently discovered that I'm still on the mortgage. The up-side of this is that it has (probably) been positively affecting my credit this whole time. The down-side is that it's (probably) going to prevent me from buying another house in the future.

Where do I start? Do I call my ex-wife? Do I just call the bank? She's not going to have to refinance the house or anything inconvenient, is she?

I created a throwaway email if more info is needed, [e-mail].

Thank you very much for any and all information!

posted by anonymous to Work & Money (16 answers total)

Your wife will need to refinance the mortgage in her own name. That, to the best of my knowledge, is the only way. You can't modify an existing mortgage like that.
posted by mkultra at 6:48 AM on August 3, 2009

What did your divorce agreement say? Who was the house awarded to?

When I got divorced, the house was put in my name and I immediately refinanced in my name only; I would imagine the same thing holds true in your situation. If she's been making the payments without you it should be fine.
posted by dzaz at 6:54 AM on August 3, 2009

You currently share responsibility for payment of the mortgage. Yes, she will have to refinance. You need to know if you are still on the deed. I'd get a lawyer. If you had a divorce lawyer who didn't pay attention to this, that lawyer is inadequate.
posted by theora55 at 7:02 AM on August 3, 2009 [2 favorites]

My experience was the same as dzazz'. In fact, I was obliged to refinance the house, if for no other reason than because my ex-wife was cashing out her stake in it. I'd be surprised if your ex wasn't also obliged to refinance in her name. You should take a look at your divorce decree.
posted by adamrice at 7:07 AM on August 3, 2009

You can't remove yourself from a mortgage. Yes, she's going to have to do something inconvenient - refinance. This is a huge huge financial liability on your part - if she slips and doesn't make the mortgage or has a lien placed against the property, you're on the hook. That's a huge part of your credit report. This needs to be addressed ASAP.

Now, I'm a bit surprised this wasn't fully mandated as part of your divorce agreement, that she immediately takes sole possession and responsibility (financial and otherwise) of the dwelling.

I'd touch base with the lawyer who handled your divorce, review the divorce agreement and then decide how you're going to contact her.

If the divorce ended contentiously and there was a decree that she was to take entire responsibility for the property, and you do not talk to her at all or you feel this has the potential to be WWIII, you might want to employ your divorce lawyer (or find another lawyer, whatever) to draft a letter and remind her that she is required to do so as of the agreement and give her 30 days to respond with her course of action, documenting that she's working with a lender and give her 90-120 days to secure refinancing, removing your name from the mortgage and deed, per the divorce settlement.

The downside....? Refinancing is entirely and wholly a ginormous pain in the ass right now and one income/individual might have a hard time qualifying alone. YMMV.
posted by jerseygirl at 7:11 AM on August 3, 2009

Big divorce rule that few people realize: a divorce decree is between you and your wife. It doesn't cause anything to happen. Everything, other than the dissolusion of marriage itself, that the divorce decree says has to actually be completed by the parties to the divorce after the decree is finalized.

A divorce degree isn't a real estate document -- it doesn't change real estate ownership, that's your responsibility to get done. So you probably, on paper, still own the house, too. You'll have to file a quit claim deed (or something along those lines, depending on your state and county's laws). Your lawyer should have been on top of that and filled it out for you: it's usually one page, four blanks to fill in, and one signature, and a small filing fee...but if you're still shown as an owner on the property, the bank probably won't let you off the mortgage. This is step one if it hasn't been done yet. IANAL, but a quit claim deed is very, very simple, and can be done by yourself with a standard form: make sure the legal description matches the mortgage's description, and you'll be fine.

Also: the bank isn't a party to the divorce: you're responsible to get the financial stuff sorted out, which means talking to the bank and having it refinanced in her name only. It sounds like she's got the payments and everything under control, so there shouldn't be a problem in changing the loan from a two-person, two-income mortgage into a one-person, one-income mortgage. However, if her credit history has any blemishes or if the home value has dropped too much, a bank could make it difficult for you, especially now that they're being pickier on credit.
posted by AzraelBrown at 7:40 AM on August 3, 2009 [2 favorites]

So what would happen if the wife wasn't able to refinance the home, due to bad credit or lower income or the mortgage being underwater? Would the husband be trapped in the mortgage? Banks don't exactly let you walk away from a mortgage.
posted by smackfu at 7:56 AM on August 3, 2009

Yes, smackfu (standard lawyer & Rev Lovejoy disclaimer exists: short answer yes with an if, long answer no with a but) . Anon remains liable on the note and mortgage until he is released by the lender from his obligation under the Note and Mortgage. There is more than one way that can be accomplished, but a divorce decree alone will not accomplish that. At least in any US jurisdiction where the property is located.
posted by crush-onastick at 8:14 AM on August 3, 2009

smackfu: IANAL, but his recourse would be to sue the spouse for damages if anything goes wrong -- when it comes to credity things, the divorce decree is handled sorta like a contract. If the DD says that the wife is to take on the debt entirely herself, but the husband gets socked with foreclosure, he has a right to sue her based on the divorce decree. The bank wasn't in the courtroom when the divorce was done, so they don't have to obey anything the decree says: the wife, however, was there and is bound to the decree, so she's the one liable if she doesn't live up to her part of the agreement. For example, let's say the bank says, "the loan is upside-down -- we'll refinance if you get it paid down another $30,000." Ex-husband writes a check, gets his name off the loan, but I believe then he can sue the ex-wife for that $30,000 because it's her responsibility according to the divorce decree, and possibly take out a $30,000 lien on the property to cover himself if the property goes into foreclosure - or foreclose it himself if she doesn't pay it off. Again, IANAL, but I've seen similar things in the banking setting before.

(If things are to that point: ex-husband should find a good mortgage banker - not necessarily a broker - and work something out. A good mortgage banker knows the ins and outs, and can, if the husband is buying a new property, work between the two, possibly using the new property as collateral to pay down the old joint mortgage, to avoid too much out-of-pocket. The absolute last thing the exhusband wants is that old jointly-owned house to be foreclosed on while his name is connected in any way. That is a shitstorm of epic proportions financially for a guy who thought he wasn't involved).

I also think that, once upon a time, the husband could still get a mortgage for himself, holding up the divorce decree as protection and proof that he doesn't "really" already have a mortgage, but I doubt that'll fly these days.
posted by AzraelBrown at 8:31 AM on August 3, 2009

Would the husband be trapped in the mortgage? Banks don't exactly let you walk away from a mortgage.

Without airing all my issues in public, this happened to me (ex-spouse had house). If the OP or smackfu anyone wants the perspective, feel free to MeFi me.
posted by pointystick at 8:43 AM on August 3, 2009

If the original loan is an FHA or VA loan, it may be assumable (see question 85 here); sometimes the responsibility of these loans can be transferred (if the assumer qualifies) by paying a transfer fee.

Rules for assuming FHA loans are here. (PDF)
posted by zepheria at 10:23 AM on August 3, 2009

Your ex-wife is in fact going to have to refinance the house. And if she "got the house" in the divorce, this was likely addressed in the decree, as jerseygirl pointed out. But, please please please,

DO NOT SIGN A QUIT CLAIM DEED. That was a piece of particularly poor advice.

The quit claim will take your name off the deed (which is between you, your ex, and the county that the house is in), but it does not eliminate your financial obligation on the mortgage (which is between you, your ex, and the bank that holds the note). Only a refinance by your ex will change your financial obligation.

If you file a quit claim, you will be essentially giving up your right (your 1/2 of the property ownership) while maintaining your obligation (your 1/2 of the financial liability). I cannot stress this enough: do not sign a quit claim with consulting your attorney.

AzraelBrown: "I also think that, once upon a time, the husband could still get a mortgage for himself, holding up the divorce decree as protection and proof that he doesn't "really" already have a mortgage, but I doubt that'll fly these days."

I'm not going into specific details here but I will state that I am presently involved as a tertiary party in the exact situation the OP has shared (OP, feel free to email if you like). Please believe me 100% that the husband does still "really" already have a mortgage, and that he will not be able to get another one unless he is liquid enough to meet the bank's criteria for "can this dude make two simultaneous house payments." Whether he lives in the ex's house or not is not the mortgage guy's concern.

What AzraelBrown was in fact correct about is that the mortgage company doesn't care about the divorce. They issued a loan to Mr. OP and Mrs. OP; it was a financial arrangement between those three parties. That the titles are now Mr. OP and Ms. OP is very much not the mortgage company's problem. The mortgage company will tell you, "we are not a party to your divorce, and therefore we do not care about your decree or what one party was 'supposed' to do."

jerseygirl's advice is totally solid.

OP, get out from under this as soon as you humanly can. Yes, you have benefited from the payments creating good credit (as far as you know*), but life can turn on a dime, and if the pendulum swings the other way there will be very little you can do to correct your credit.

I will also add that you should ask your attorney about whether there is a statute of limitations regarding real property. You do not want to get the phone call saying that, because you let your ex keep the house for so long, she now legally has all rights and you have none.

And, I also suggest that you contact the bank that holds the mortgage right away, and ask them to send you a copy of the payment records. Since you're still on the mortgage, you're entitled to that information. You need to know for a fact that the payments have been timely and that there have not been defaults made in your name. (FYI, your attorney will likely ask for this info anyway.)

If ex refuses to or is unable to refinance, you will have to go to court. No other way around it.
posted by pineapple at 2:14 PM on August 3, 2009

Pineapple: I respectfully disagree about the quit-claim deed: if the divorce decree states the house becomes the property of the wife, he has to rescind his ownership to the property legally; there will need to be a quit-claim deed at some point.

However, a bank is unlikely to let a person off of the mortgage if the is still an owner on the property -- that's an adverse encumbrance, for example, if that not-on-the-mortgage, property-owning person files bankruptcy, the state claims the jointly-owned house because it's the "second home" of the person filing bankruptcy, and the mortgage quickly becomes unsecured, or subordinate to a lien related to the bankruptcy.

I think what you're worried about is a lot of time passing between the quit-claim and the mortgage refinance; ideally, the two changes should be made at the same time, but that may or may not be possible, depending on what's actually been done. As the OP says, the divorce was over quite a while ago -- he might have already quit-claimed his ownership away, because it's a simple form and easy for divorce lawyers to take care of: "Here, sign this to take care of transferring the house to your wife".
posted by AzraelBrown at 4:53 PM on August 3, 2009

>> AzraelBrown: "Pineapple: I respectfully disagree about the quit-claim deed: if the divorce decree states the house becomes the property of the wife, he has to rescind his ownership to the property legally; there will need to be a quit-claim deed at some point.

And yet, we know that the OP is still financially responsible for half of the house, from his post. We also know that he is slightly confused about what the ownership of the house actually entails, since ex "got it" in the divorce yet never was made to refinance for whatever reason.

Therefore, advising a quickie no-takebacks "solution" like a quit claim (because you feel like a quit claim will be likely necessary "at some point") seems kind of irresponsible to me. Especially since whatever legally binding manner in which the OP is able to officially relinquish ownership will be specific to his particular divorce decree in his particular jurisdiction, neither of which we actually know anything about.

>> However, a bank is unlikely to let a person off of the mortgage if the is still an owner on the property -- that's an adverse encumbrance, for example, if that not-on-the-mortgage, property-owning person files bankruptcy, the state claims the jointly-owned house because it's the "second home" of the person filing bankruptcy, and the mortgage quickly becomes unsecured, or subordinate to a lien related to the bankruptcy.

This all sounds great from a banker's standpoint, but from a legal standpoint, it's an outlier that doesn't sound relevant to this situation since OP didn't mention being in financial crisis.

>> I think what you're worried about is a lot of time passing between the quit-claim and the mortgage refinance;

No, I'm worried about the quit claim happening before the mortgage refinance. As I already said, the deed and mortgage are two different contracts that are related but not equivalent. And we know that the ex got the house "several years ago" and still has not refinanced it. Is it because she just had no idea that the joint mortgage was still in place? Did she just never think about the bills that keep coming with OP's name on it? Those are benefit-of-the-doubt speculations... but it's also reasonable to suspect that the ex is getting a pretty sweet deal here, with all of the rights and only half of the responsibility, and that she'd have no vested interest in rushing the refinance if OP isn't pushing for it.

Regardless of the wording of the OP's specific decree, a situation where one party gets 100% possession of a real property and the other party keeps 50% financial responsibility (unbeknownst to him and his FICO score) is hinky, and not family court standard. The OP needs to talk to his divorce attorney before printing out some form off the internet and signing it over to his ex on his own without counsel, as you advised here.

"IANAL but hey, just sign this legal form and give it to your ex" is treading perilously close to an answer that is more harmful than helpful, in a question with distinct financial and legal implications. I'm not saying you don't know the finance side of this, AzraelBrown... but the finance side isn't the only place that OP needs to cover his ass. A quit claim doesn't make the mortgage liability disappear into thin air.
posted by pineapple at 6:15 PM on August 3, 2009

Where do I start? Do I call my ex-wife? Do I just call the bank? She's not going to have to refinance the house or anything inconvenient, is she?

Call a lawyer before you do any of these things. You need someone who can look at your specific divorce arrangements and apply the law of the relevant jurisdiction to them rather than just guess. Who knows what weird details are lurking in there, and nobody can give you meaningful advice about what to do unless they fully understand what happened back then. Your lawyer will also tell you how you can communicate with your ex and the bank without irretrievably compromising your position (and I'm pretty sure they'd tell you not to sign that quit thing).
posted by A Thousand Baited Hooks at 4:51 AM on August 4, 2009

Pineapple: All throughout, I've said he has to do both parts: refinancing and a quit-claim deed -- not one "quick fix" and skip the other. Even if a bank lets him refinance without a quit-claim deed, one still must be done. If the divorce decree says, "wife gets the house," and he hasn't filed a quit-claim deed, she could request a motion to compel, get him found in contempt of court, sue for damages, etc; a quit claim deed is necessary to the process, and I'm concerned that the OP will think, "nah, as long as I'm off the loan, I'm scott free," when there's a potential for a lot of hurt if it isn't done. If she screws up the refinancing, the husband can sue based on the divorce decree; if he screws up the property title, she can sue. Advising him not to do a quit-claim at some point is rather irresponsible...but hopefully he'll take both our advice and talk to a lawyer, since the back-and-forth seems to ignore the entirety of posts, instead only focusing on one part and acting like it was the only thing said.
posted by AzraelBrown at 8:25 AM on August 4, 2009