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Homeowner wishes to remove ex-spouse from mortgage without refinancing

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Q: My ex-spouse will sign a quitclaim deed on the house. Will that remove her name from the mortgage? Her name is not on the loan promissory note, but she is on the mortgage and some of the other documents.

How can I remove her name on the mortgage document without refinancing the loan?

A: Let’s start with the difference between the promissory note and the mortgage document. These are two separate things. The promissory note is the obligation to repay the loan. The person that signs the promissory note is the person who had the credit to get the loan and is legally responsible for repaying the amount owed. The mortgage document is the document that creates the lien against the property.

In your email, you said your ex-spouse is on the mortgage, but not on the promissory note. The short answer is that the quitclaim deed will only transfer whatever ownership interest your ex-spouse had in the house to you and nothing more. If your ex-spouse’s name is on the mortgage, her name will remain there until the loan gets paid off or if your lender is willing to release her name from the mortgage.

Usually the easiest way to get a person off the mortgage is to refinance the mortgage. We understand that refinancing may be difficult, especially if you have to qualify for the loan on your own. And, refinancing may be costly, especially now that interest rates have jumped so dramatically.

Since your ex-spouse apparently wasn’t on the promissory note or loan, they have no personal liability when it comes to the loan payments. They’ll likely see little impact by having their name remain on the mortgage. The lender will report on-time payments or late payments only on the name that is listed on the loan. That would be you and not your ex-spouse. If you make a late payment, your credit will get hurt. Your ex-spouse’s credit should show no impact.

You can call your lender to see if they are willing to issue a release of mortgage for your ex-spouse. We haven’t heard of any lender doing that except in a refinance, even if a judge has required it as part of a ruling or divorce decree.

Just be aware you likely won’t be calling the company that made the original loan. Most lenders sell their mortgage loans on the secondary market or package them as securities. As such, the servicing of the loan is done by a loan servicing company. Servicing companies collect monthly payments, pay money for real estate taxes and insurance from escrow impounds that they collect, and issue a release of lien or mortgage upon the complete payoff of the loan. They may also do loan workouts or modifications, if necessary. (We saw a lot of this during the coronavirus pandemic and the Great Recession.)

Of course, they also initiate foreclosure proceedings to sell the home if a borrower fails to make the payments on the loan.

But they’re not used to doing anything outside of what we’d call “standard operations.” Once the quitclaim deed has been recorded, and you can prove to the loan servicer that you are the only person on the title to the home, you can call to see if they’re willing to help. Just don’t hold your breath waiting for it to happen.

(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through their website, bestmoneymoves.com.)

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