It’s hard to take old flame off mortgage

Published 9:00 pm Saturday, September 25, 2004

Q How do you get your name off a mortgage that you had once shared with an old flame but now have no communication with?

The goal is no money needed in return, and not to have to pay a sizable fee or cause havoc with the old flame.

S.B., Everett

A Lenders are reluctant to release one borrower from a mortgage on which two borrowers originally signed for the simple reason that they are in a much stronger financial position with two people on the hook rather than one.

You didn’t say whether you or your old flame currently owns the property, so I will address this issue from both perspectives.

If you no longer live in the home and want to have your name taken off the mortgage, you have virtually no chance to accomplish that. That’s because if you contact the lender and asked to be removed from the loan, they would probably say “no.”

However, they might agree to release you from that liability if your old flame is willing to assume 100 percent of the liability for the mortgage and he or she can qualify for the loan payments based on his or her income and credit only. Since you said you do not want to cause havoc with the old flame, I assume you are not on good terms with him or her, and therefore such an agreement may be difficult, if not impossible, to reach.

Now, on the other hand, if you are the one living in the house and you are trying to get your old flame’s name off the mortgage on which you are making the payments each month, the simplest option is to refinance the mortgage and get a new loan in your name only.

That assumes that you have sufficient income and credit to qualify for a new mortgage. But even that problem can be overcome if you have a family member with a good income and credit who is willing to be a co-borrower on the loan for purposes of helping you qualify. If your existing mortgage has a lower interest rate than you can get on the market, you might try to contact your lender and ask them to let you “assume” the entire mortgage.

Again, you will have to show that you have sufficient income and credit rating to qualify for the payments on your own. Typically, there would be some bank fees involved that would range from a few hundred dollars to more than $1,000. You mentioned in your letter that you don’t want to pay a “sizable fee,” but that may be unavoidable.

The moral of this story is that it is always risky for an unmarried couple to become co-borrowers on a mortgage to purchase a home.

While a fairly large percentage of marriages end in divorce, far more unmarried couples end up going their separate ways at some point in time – usually sooner rather than later. You entered into a real estate partnership when you bought the house together. The smart thing would have been to treat this as a business transaction and draw up a contract going into the deal that outlined exactly what would happen if and when you broke up and one of you wanted to keep the house.

For example, you could have required both parties to cooperate fully in completing whatever paperwork might be required to release the nonresident party from the mortgage. You could also have agreed to split whatever fees might be incurred in this process 50-50, or in any way that you chose. Unfortunately, most couples don’t buy a home together thinking of it as a business transaction, so these kinds of potential problems are not worked out ahead of time.

Mail your real estate questions to Steve Tytler, The Herald, P.O. Box 930, Everett, WA 98206. Fax questions to Tytler at 425-339-3435, or e-mail him at economy@heraldnet.com.