Post for a friend of mine: D had a mortgage with ex. Divorced, D quick claimed house to ex. Mortgage is still reporting as ex did not file the quick claim with her mortgage co. Account is in good status however D is now wanting to purchase home with new W - CR looks as if he's responsible for a mortgage already. He doesn't want to lose the +TL because it was his for a while. Would it be better to send the qc and divorce papers to the mortgage holder or to the CRA? I know that typically you don't send to CRA but in this case, it's a + issue.
A quit claim (not quick claim--it's quit because it means you quit all rights to the property) has no effect whatsoever on the mortgage. If D signed as a co-borrower on the mortgage, he is a co-borrower on the mortgage until it is paid off, either by paying the full term or through refinancing. Sending documents to the mortgage company will do nothing--he is liable for the mortgage. Whether or not he owns the house is immaterial. I know this doesn't sound right, but it's true. I've been through it. I signed a quit claim to my ex-husband's house, but the mortgage is still reporting on my report (and has a late payment). In fact, when I recently tried to refinance MY house, the company I was dealing with kept insisting that it was my mortgage and they would have to pay it off. I told them that was a deal breaker, so I didn't go through with the refinance.
Quit Claim / Morgage Oh wow Hedwig! Thanks for the info.... all of it. Evidently the ex was suppose to refinance on her own but never did. So essentially D has given up rights to the home, but still responsible for the debt. That stinks. Any idea on how they can force the refinance -- it's a FHA loan.
Quit Claim What if the ex was on the deed but the house was financed in your name only? Can you just send the divorce papers to the mortgage company?
If the house was financed in your name, then you owe the mortgage loan, even if your ex is making the payments. If your ex fails to pay, they can forclose on the property, and they can come after either party on the loan for any remaining amount still due after forclosing. A quit claim does not change that, as it only releases the property ownership interest in the property of the party signing the quit claim, which has nothing to do with responsibility for repaying the loan. The lender has no advantage from releasing any party already responsible for the loan, so why would they? If your ex was on the deed, and your name only was on the loan, then it would be cleaner for your ex to quit-claim it to you, perhaps in exchange for apporpriate adjustments to splitting of other property, so that the sole owner of the property is also the sole party liable for the loan on it. Althernatively, if that could not be done, you might both be better off in untangling your financial affairs to either have the party who gets the house refinance it in their name only, or sell the house and split the equity so you can go your separate ways. A quit claim should probably not have been filed until such refinancing was in place, to allow forcing sale if it did not happen. Otherwise, both parties whose names are on the loan will be subject to the credit consequences of any mortgage payment problems. In effect you are unwinding not only a marriage, but also a financial partnership. Note: I am NOT an attorney.
I'm a little perplexed by this situation; wasn't this settled through the divorce proceedings? Generally, the mutual property must be dealt with before finalization of a divorce. As previous posts explained, the claim does nothing to the debt and financing scenario, only the legal "claim" to the property.
