Removing Someone From A Note.
If there are two borrowers on a note, is there a way to remove one without refinancing?! Need to do this with a client so he will qualify for another mortgage. Him and his wife divorced, but the decree did not state that he isn't liable for payments. He is trying to qualify for another loan. Mortgage officer told me he was qualified for a sub-prime loan but now says she doesn't think so because his debt-to-income ratio is too close. W/out the first mortgage, he would qualify for a conventional 100% financing program. A quit claim will not take him off of the loan, although it will take him off of the title. Any ideas? A refinance would take too long as we have a signed P&A and due to close ASAP.
Thanks,
Chase
Thanks, I know he'd be willing to pay the point if that would work. We were thinking about having the attorney amend the decree and state that he isn't liable for the payments and doesn't live there(which is true) but he would still be on the note so I don't think that would work.
It doesn't matter WHAT the atty puts in the decree. The lender still holds a LEGAL CONTRACT that says he IS liable for the ENTIRE loan amount.
The ONLY way to get him off the loan is to
Get the LENDER to agree to remove him--DOUBTFUL
Have the ex-wife refinance the home in to HER NAME ONLY.
The LATTER of the two is what should've been in the decree.
Think about it--if you were the lender and you had a legal right to go after TWO people for your money, why would you agree to let one of them off the hook?
Is the note held by an investor or by an traditional lender (institution)?
As already noted you need the lender agree to release him. If the lender is a private party they might agree to a modification to the note or a substitution that is not an issue for the new purchase.
Otherwise he is stuck until the ex-wife decides she is refinancing or moving.
How well does he get along with his ex? If they can speak about it maybe he can motivate her to refinance by paying the costs or something similar. That said she will need to qualify before that is an option. Nothing was discussed about her ability to refinance.
John
[addsig]
Refinancing will take too long. That apepars to be the only option. I think our loan officer is getting the underwriters to ignore the loan on the current house though by having the ex sign something saying she is making payments, and proof of the last 6 payments coming out of her account. Find out on monday. Thanks