Refinancing my mortgage while wife files for bankruptcy

[vinteloz]

Seems like a simple enough question, but I can't seem to find the answer. Here are the details:

My wife and I were married in 2007 and separated shortly thereafter (legal separation agreement was filed). During that separation she went crazy with credit cards and is 30k in debt.

During our separation I purchased a home. We got back together in 2009 and are living in the home I purchased. The mortgage and the home are in my name. Also when we got back together we entered into a post-nuptial agreement stating that the home is solely mine and that her debts are solely hers.

Right now she has a lawyer working on her bankruptcy filing. And right now, I am in the middle of refinancing my mortgage.

The bank is saying that since we are married and live together, she will need to sign a few documents, namely the Mortgage, Truth in Lending and Right to Cancel forms.

The bank's lawyer is also saying that this will in no way impact or affect her bankruptcy filing. Her lawyer also stated that it wouldn't. I just wanted to get a few more opinions. As I am not an attorney nor have ever dealt with bankruptcy before, I want to make sure that when the courts are reviewing her petition, her signing of some forms will in no way interfere with the process. Thanks for your help.

[ValleYum]

I had a somewhat similar situation happen to me. I married a man who bought a house for us in his name only as I still owned a home in another state with my ex-husband.

A few years later, after my ex sold our old home, hubby and I re-financed his house to get a 3% reduction in our interest rate. I had to sign the mortgage, the TILA form and the right of cancellation form.

Hubby in turn had to sign a quit-claim deed for 50% right of ownership to me in order for the bank to put me on the mortgage. (IIRC, the bank said something about the deed and mortgage needing to be for the same people)

Your wife signing the mortgage puts her on the hook until her Chapter 7 discharge removes her financial liability. That would be a wash for her. However, if they make you sign a quit-claim deed in order to obtain your re-fi, she is considered an owner of the home as long as her name is on the deed. I also believe if you ever went to sell the home at a later date, she would have to sign the sales documents if her name is still on the deed. Something to get more details about if they do ask you to sign a quit-claim.

Furthermore, won't you have to make sure that the lien is perfected on the new loan before your wife files her bankruptcy (or does that matter in real estate)? Hopefully Des or HHM or one of the other gurus will chime in if they have and advice for you particularly about the lien.

Please make sure that you ask a lawyer who works for YOU - not the mortgage bank or your wife. It may be worth the $$ to pay for a quick attorney's visit to make sure that everything everyone else is advising you to do is truly in your best interest.

Good luck!!

[vinteloz]

As far as I know, the bank is not requiring me to sign anything that would add her to the title or the deed. They had asked if I wanted to add her to the title and I made it clear that I would not be. Also, I'm not sure what is really meant by "signing the mortgage." The bank nor the title company asked for anything other than her name. They didn't want her ssn nor did they perform any credit checks on her. So to me it seems like she will not be held liable for the mortgage. And considering her financial situation, there is no way any bank would feel comfortable adding her to the mortgage.

What I don't want happening is her not being able to file for bankruptcy just because her name is on my mortgage documents. Also, if lets say this precludes her from being able to file, what happens when I try and sell the place? Would any creditor want payment from the proceeds of the sale? Even if the home is not in her name and we have a post-nuptial agreement stating that the home is 100% mine?