Q: My husband and I co-signed a loan for our son and his now ex-wife. Our son stayed in the home but fell behind on the payments, and the home was in foreclosure. His ex-wife discharged her mortgage debt through bankruptcy, but her name is still on the deed. Our son has deeded the house to us, and we made payments to the bank to bring the property out of foreclosure. We’re trying to complete a short sale, but she won’t cooperate. What can we do?
A: Co-signing a mortgage is always a risky move because it means that borrowers are responsible for the loan payments without rights in the house that is securing the loan. You at least have rights because your son deeded the home to you, but your patience will be tested by your former daughter in law.
Check your son’s divorce papers to see if the court ordered the ex to deed the property to your son. If that’s the case, and she hasn’t complied, your son can point that out to the judge.
If the divorce papers are no help, explain to her that she has the responsibilities of ownership, even though she no longer owes the bank. She could be personally liable to the homeowner’s association and tax collector. And if someone is hurt on the property, she’ll be sued right along with you.
If that doesn’t do the trick, you may be able to sue to have the court determine everyone’s interest in the property. The judge may even order her to cooperate in a short sale.
Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar.