Forceclosure question in FL

[jammerjoe]

I am planning to file bankruptcy. My wife of two years wont. we bought a house last year on my credit but legal issues are forcing my hand and she can't afford to keep the place. Also, she was required to sign the loan docs (HUD) which I never understood.

Will she get stuck with the default on the mortgage if I claim it in a BK? How can I protect her from the fall out?

[tobee43]

if she doesn't file with you yes, she could still be found responsible. are you planning on keeping the house?

[jammerjoe]

no we aren;t does that matter?

[jammerjoe]

Full disclosure...looks like I'll be going to jail for a few years. Will this change things? Can she relinquish any claim to get her out from under?

[tobee43]

Full disclosure...looks like I'll be going to jail for a few years. Will this change things? Can she relinquish any claim to get her out from under?

since she's' not planning on keeping the house, maybe it's time for her to consider bk as well. since florida is a deficiency state and if one doesn't file by the time the Mortgage Debt Relief Act of 2007 ends, she could also be stuck for some type of taxes for the house as well as a deficiency, unless she files herself and lists the mortgage. once the bk is discharge the mortgage goes with it.

[justbroke]

If she signed the loan documents and she is listed on the loan, then she is jointly responsible for the debt. I agree that a bankruptcy may be the course of action to remove any issues with foreclosure of the property.

Are you sure she's on the loan itself and not just on the deed? There's a difference of signing a HUD-1 and signing the actual Mortgage and Promissory Note.

[tobee43]

jb, i might be all wrong here...but, i thought, it depends on when your name went on the deed. if your name was on the deed before the mortgage was granted then the bank can only foreclose on the co-owner's interest if you didn't sign the mortgage. i know this has become a practice in some states although it can cause problems in the event of a default. "in order for the lender to have their interest in the mortgaged real estate perfected, all the owners must sign the note and mortgage. generally, if you own an interest in real property and don't sign the mortgage, the bank cannot foreclose on your interest in the case of a default since YOU did not transfer your interest to the bank."

if his wife's name was added by deed after the mortgage was executed then one's interest in the property is subject to the mortgage. also, changing the names on a deed for property that is subject to a mortgage may trigger the due on transfer clause. most mortgages carry boilerplate language that provides if the property is transferred the lender can demand full payment of the mortgage. (this is situation that i was or am familiar with). i really don't think op or his wife would have to worry about this if in fact she just filed if she is found on the mortgage.

many lenders during the sub-prime lending frenzy wrote mortgages without having all the owners sign. In that case the lender does not have full interest- only the interest of the person who signed the mortgage. Unscrupulous lenders are only interested in collecting the high fees and costs associated with the initial transaction. they aren't concerned with good title if the borrower defaults since the loans are sold soon after the transaction. but i do want to mention that recently in florida i know of situation when a name was going to put on a deed and the atty advised against due to the fact the mortgage lender could call in the loan. i'm not certain if that's absolute truth, it would just be a concern if they wanted to keep this house.
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[justbroke]

I'm probably confused as well. If this is a new purchase and you are doing a HUD-1 and Mortgage and Promissory Note at the closing, then the deed is changed only once (from the seller to the buyer(s)). You couldn't, in that case, get the Deed assigned to one person and then modified for the mortgagor.

I think you could create a situation where the mortgagor (the borrower) pledge only "their" interest in the property. I don't know what mortgage company would make that mistake, but it probably happens/happened! Re-reading the original post, it still reads as though the spouse signed the "loan documents" at the closing. This would make her subject to the terms in the Promissory Note and Mortgage regardless of how the property is titled (deeded).

[tobee43]

it's actually a very interesting subject. i suppose that's why it's so confusing LOL! i read it the same, if the spouse attended the closing most likely she signed the documents and if not, how and when did her name get on the deed.

[jammerjoe]

She was at the closing and signed the docs. I never understood that. I am the only person listed as owner in the property appraisers office, not sure if that means anything or not.

[TheBajan]

She was at the closing and signed the docs. I never understood that. I am the only person listed as owner in the property appraisers office, not sure if that means anything or not.

You can be the sole owner of the property and yet if she is on the NOTE to pay for it then she is still personally responsible for the debt. If you are the sole owner, the bank has 100% interest when you discharge it in your BK but they can still come after her for the balance due if she signed the note and obligated herself to pay for it.

On the other hand, if you both own the home and only you signed the note, you are the only one responsible to pay it. The bank still has 100% interest when you discharge the debt in BK and she will lose the home but they can't come after her because she didn't obligate herself to pay the loan.

That was the case with our situation on our second mortgage. The deed to the house is in both mine and my husbands name. When he took out the second mortgage, he did it on his own. We did not apply for the loan together so even though the house is jointly owned by the two of us, he is the only responsible person on the note.

Here's the confusing part. When it was time to sign the paperwork for the loan, the loan officer made me sign some of the documents because I'm part owner of the real estate and it was necessary for them to inform me that if HE were to default, it would affect my interest in the house. In other words, I had to sign the mortgage documents but not the promissory note to re-pay the loan.

It is possible that your wife, being part owner, was required to sign the mortgage but not the note so check into it carefully. It will make a big difference in deciding which way to go with this. If she's not on the note, she's not responsible and there's no reason for her to file BK. If she is on the note, she will need to file in order to get rid of this.

Best wishes to you both. Please let us know how this turns out for you.

[jammerjoe]

Ok..just pulled a 2 page document called Note. Mine is the only signature. Is/are there more documents I should also check? She signed the HUD-1 papers.

[TheBajan]

Ok..just pulled a 2 page document called Note. Mine is the only signature. Is/are there more documents I should also check? She signed the HUD-1 papers.

Your wife should be all set then. I would double check to see who actually owns the house because you said it's just in your name at the property appraisers office. The deed is a matter of public record at the county clerks office. The assessor may or may not have the legal info taken from the deed. If she signed mortgage papers with Hud but not the Note, it indicates that she must have some ownership in the property. The main thing is the Note. As long as she did not sign the Note, she is not responsible for the loan.

[justbroke]

Ok..just pulled a 2 page document called Note. Mine is the only signature. Is/are there more documents I should also check? She signed the HUD-1 papers.

You could check the Mortgage, but with how you wrote this posting, it appears that she pledged the house as well, but is not responsible for the underlying debt.

[TheBajan]

You could check the Mortgage, but with how you wrote this posting, it appears that she pledged the house as well, but is not responsible for the underlying debt.

JB, that is essentially what they made me do. I haven't dealt with Hud so I don't know if it's different but in our case I had to allow them to have my interest in the property if my husband defaulted on the Note.

Also, as a side thought, both of our names are on the primary mortgage and both the first and the second were conventional loans with the same CU (Navy Federal). Like I said, I'm not familiar with Hud but I do know that if she didn't sign the Note, she's not responsible for the loan.