There are two ways to remove a divorced partner from a mortgage: obtaining a release of liability from the lender or refinancing the mortgage. A release from liability is easier, but counts on the lender granting permission.
If you need to remove your ex's name from a mortgage without refinancing, you could request a quitclaim deed (a legal document that allows you to transfer interest in real estate as a grantor to a grantee).
The Bottom Line
If your name and your ex-spouse's name remain on a mortgage after you divorce, your marriage may be over, but your financial responsibility isn't. As long as both names are on the mortgage, the lender holds both of you responsible for the debt.
Divorcing couples with joint mortgages may choose to remove one of their names from the mortgage, leaving the other as the sole remaining borrower. There are two ways to do this: refinancing or assuming the original mortgage.
Even if one person doesn't want to or can't pay the mortgage, both people are likely still on the hook for the debt. The lender can often come after either person for the full amount of the existing mortgage, no matter who is named on the mortgage.
Yes, it is possible to take sole responsibility for a home that you're currently sharing without refinancing, even if your ex-spouse or another co-borrower or cosigner is currently on the mortgage. As long as both names are on the mortgage, both parties will continue to be financially responsible for repaying the loan.
Transferring the existing mortgage to the spouse keeping the house might be the easiest way to settle the housing issue. Usually a lender will want copies of the divorce decree and a properly executed and filed quitclaim deed in order to transfer the mortgage. Taking over a mortgage is called a mortgage assumption.
When you separate from your partner and have a joint mortgage, you are both liable for the mortgage until it has been paid off in full. Bear in mind that this is regardless of whether you still live in the property or not. You will need to make sure you keep up with any repayments you are legally obliged to make.
If you and your ex-spouse's name are on the mortgage, you will both be held liable for the mortgage unless you refinance it out of their name.
File a motion for contempt: You can file a motion with the court that handled your divorce to enforce the terms of the divorce decree. This may involve requesting that your ex-wife be held in contempt of court for failing to comply with the order to refinance the home or obtain a new loan.
No, many divorcing couples may decide to sell the home if they can't afford the mortgage payments after the divorce agreement. But if you or your ex-spouse want to keep the home, a refinance might be the best method of removing a borrower's name from the mortgage loan.
As joint tenants:
You can take an itemized deduction for one-half of the mortgage interest, and your ex-wife can take the other half as an itemized deduction. You can deduct half of the mortgage interest and one-half of the mortgage principal payment as alimony (and your ex-wife must report these payments as alimony).
Filing for divorce often leads to debt. You have to pay for the whole process, divide your assets and debts between the two parties, and you may also have to pay alimony and child support after it's over. This can cause financial hardship and negatively impact your credit.
If the borrower forged your signature, or if they committed fraud to enforce you to sign the loan contract, you can sue both the lender and the primary borrower to have your name removed. However, you'll need unquestionable proof that you did not willingly consent to cosign the loan.
A mortgage transfer is when you transfer your existing home loan—including its current interest rate and terms—to another person. This allows the other person to assume responsibility for the home and the lender's lien on it without needing to get a new mortgage.
You have too much debt
The most common reason why refinance loan applications are denied is because the borrower has too much debt.
Until your divorce has been set in stone, you should continue to pay your mortgage. Once you and your spouse are legally divorced, one of you will assume possession of the house. At that point, the ex-spouse who still owns the house will be responsible for shouldering the full cost of its mortgage.
Removing a cosigner or co-borrower from a mortgage almost always requires paying off the loan in full or refinancing by getting a new loan in your own name. Under rare circumstances, though, the lender may allow you to take over an existing mortgage from your other signer.
After the mortgage refinance closes, only the person named on the mortgage would be responsible for making the monthly payments. The person no longer named on the mortgage could then be removed from the home's title. If necessary, a cash-out refinance could pay the portion of equity that is due the departing spouse.
When the amount of the equity is calculated, you and your ex can figure out how to divide the equity. For example, if both of you were employed during the marriage and contributed equally to the mortgage you acquired after you were married, the equity would typically be split 50/50.
To know whether your mortgage is assumable, look for an assumption clause in your mortgage contract. This provision is what allows you to transfer your mortgage to someone else.
During your divorce, your marital debts will be subject to equitable division between you and your soon-to-be-ex-partner. Marital debt includes any debts that were accumulated during the marriage. Thus, if you and your partner entered into the mortgage after your marriage, the mortgage is subject to division.