Can my husband refi while I am in BK?

[NewPage]

My husband would like to refinance the house (his name alone, obviously) through his credit union. This would not be a cash-out situation, but rather just to change the rate and term (it would incorporate both the 1st and 2nd on the house). He would like to start the process before the low rate disappears, but since I would have to sign a quit claim at some point (prior to or at the closing of the new loan, assuming he is approved) we wonder if it is okay for him to put the wheels in motion now, just prior to my bankruptcy filing?

I've asked my attorney the above question, but wanted to get some input tonight if anyone is around -- just curiosity!

[newbie2]

I wouldn't do it if it means signing a quit claim deed so close to filing. I don't know what your attorney told you, he/she would know best. Me? I wouldn't want to raise the issue of transferring any property until I was discharged and closed.

[SunshineGal]

Are you sure you would have to sign a quit claim deed? Most loan guidelines will allow the spouse to be on title even if they are not responsible for the loan, you will just have to sign the mortgage.

Edited to add: You wouldn't complete the loan application or have to sign the note, you would only sign the mortgage giving permission to grant the mortgage the the lender.

[NewPage]

SunshineGal -- I'm only going on what my husband (an appraiser and former realtor) said. *shrug*

This is what my attorney told me today:

I’m not sure refinancing the house makes any difference at this point. You’re merely swapping one secured loan for another. However, I would not quit claim your interest in the property until after the trustee has abandoned the asset. Until that point, and for up to one year prior to your bankruptcy filing, the house is property of your bankruptcy estate.

Abandons the asset -- what does that mean? When the case is discharged & closed?

"up to one year prior to your bankruptcy" -- Does he mean after?

[SunshineGal]

Hi NewPage,

Any asset that is transferred in the year prior to filing can be seen as a fraudulant transfer and reversed by the trustee. Once you file, everything you own becomes property of the estate and you can't do anything with it until the trustee abandons that asset. To be safe, wait until the case is closed before quit claiming the deed.

Now, if you guys really want to refinance ask the loan originator if you can remain on title with the loan only in your husband's name. Generally speaking, it was the non-conforming loans that required all owners to be on the mortgage note; Fannie, Freddie, and FHA all allow a spouse to be on the title as long as you sign the mortgage. Signing the mortgage itself does not make you responsible for the loan.