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Removing Ex-husband from the Loan
Answer by Randy Carey, BOL Guru
Guru Bios
Question: A husband and wife are together on a loan. They get divorced and the divorce decree clearly states she gets the property and is also responsible for the loan. He signs and files a quit claim deed. We are going to do an assumption with release to get his name off of the loan. She will stay on the loan and nothing else will change. What disclosure documents are needed? Is there another way to get his name off of the loan?
Answer: The bank is under no obligation to remove the husband from the loan. You can require the wife to reapply to see if she qualifies for the loan on her own. If she does, you can remove the husband from the loan through a modification and no additional disclosures would be necessary. If she does not qualify on her own, you can deny the request and the ball is back in their court. The divorce decree had no impact on your current contractual agreement with the two parties.
First published on BankersOnline.com 5/05/08
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