Financing in Lebanon>Question Details

Shannon, Home Owner in Orlando Lakes, Ormond...

My house is in foreclosure but my partner at the time of purchase is the only signor on the note. I am on the mortgage and on deed am I responsible?

Asked by Shannon, Orlando Lakes, Ormond Beach, FL Sun Nov 6, 2011

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If you're not on the loan, it's not your debt or liability per my understanding.
0 votes Thank Flag Link Sat Jan 7, 2012
Let's get clear first...are you in a "mortgage state" or a "deed of trust state"? The reason for asking is that borrowers in "deed of trust" states often mistake the "deed of trust" for the "deed" when talking about their situation(s), and they are completely different documents.

The deed is the instrument by which the former owner(s) grants or passes his/her/their interest in the property to the new owner(s), and if you are shown as one of the grantees on the deed, then you actually have an ownership interest in the property.

A "deed of trust", however, serves a different function, and is actually the legal instrument used in "deed of trust states" instead of a mortgage. It accomplishes exactly the same purpose as a mortgage, and in fact is often referred to as a mortgage in those same states because it is a term that the general public, and even much of the real estate community at large, is more familiar with. But no matter whether you're in a "deed of trust state" or a "mortgage state, these instruments are accompanied by a "note", which is the instrument that actually creates the legal obligation to repay the lender.

It's not uncommon at all, for a variety of reasons, for both members of a married couple or domestic partnership having the same legal rights as a married couple to be named in the mortgage or deed of trust, and in the deed, but not on the note. The most common case is that the one who is not named on the note has a credit score too low to meet the lender's credit requirements, but both want to be involved in ownership. In most states, if you are married or a member of such a domestic partnership, and your spouse/partner wants to mortgage a property, then it's a legal requirement that you sign the mortgage/deed of trust to provide you with "constructive notice". In other words, once you sign the mortgage/deed of trust, you have been legally notified that your partner is taking a loan against a property that you may have an interest in, and this whole concept is designed to protect the non-borrowing spouse/partner.

And regardless of all the above, you cannot be held responsible for the repayment of the debt, created by the note, unless you signed the note. But if the payments aren't made on time to satisfy the requirements of the note, then the lender can foreclose, and actually take the house from you, regardless of your ownership interest.
0 votes Thank Flag Link Sat Nov 19, 2011
From what you are saying you are both responsible. It is hard to give you an answer without all details but from what you have said that is what it appears to be. Both responsible.
0 votes Thank Flag Link Sun Nov 6, 2011
Your question contradicts itself. if you are on the note then you are on the mortgage and responsible for payment. Most foreclosures in Oregon are non-judicial which would means even if you were on the mortgage the creditor may not come after you for the deficiency but you should verify that with an attorney. If you are simply on the deed then you have no obligation on the mortgage but have a stake in any equity (funny, I know). You could always file a quit claim to extinguish your interest in the property. Again, check with an attorney to make sure you are taking the necessary steps to protect yourself.
0 votes Thank Flag Link Sun Nov 6, 2011
If the lender is filing foreclosure proceedings against the mortgage holders it is because the mortgage is not being paid, that is what causes a foreclosure. If you are on the mortgage then it seems to me that you are responsible.
0 votes Thank Flag Link Sun Nov 6, 2011
If the mortgage was not taken out in your name you are not obligated to repay it.
0 votes Thank Flag Link Sun Nov 6, 2011
Maureen Fran…, Real Estate Pro in Birmingham, MI
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