We have an applicant and co-applicant applying for a mortgage that would be a refinance from another bank. The applicant has had a bankruptcy (therefore, we would turn him down). The co-applicant could take this loan on with no problem (would be approved for this if applying by herself). The current loan/mortgage is in the applicants name. The co-applicant is not on the loan or mortgage. Not sure how to handle this. Any input is appreciated. Thanks.

Is there a relationship between them?

You are requesting the property non-owner to commit to paying for something they do not own, and the property owner to have their loan refinanced without any skin on their part, whether they pay or not. I personally would not touch this one without legal getting involved, especially if there might be a state law issue. With the way the courts are, IMHO, it seems that there could be too many claims down the road.

They are married now. I just don't know how the denial should be filled out. Him for bankruptcy (I get that). You can't deny her. Any info on what it should say? Counter offer? what should it say?

Denial - bankruptcy

Denial 2 - Does the bank have a policy for one person being primarily liable (not co-maker) on a loan in which case they will not receive a benefit?

We do not have a policy like that. I figure that now it turns into a counter offer for the co-applicant. Am i right?

You can't deny her.

Why?

They applied for joint credit; if one of the applicants do not qualify then it it is perfectly within your right to deny the credit request as a whole. There is nothing in the Regs that mandates you give a counteroffer.

Thank You very much!!!

Dan, you're 100% right. Looking back at the post, I was too short in the explanations.

Denial - the joint application due to bankruptcy, and
Denial 2 - if non-owner applied individually, a potential denial on bank policy.

I knew what I was thinking, but the fingers did not type that out properly.

I appreciate All the help!