Foreclosure in 94707>Question Details

Capo, Home Seller in 94707

I signed a home loan for a friend of mine with bad credit. I am the sole holder of the loan. Is there any way to get my name off this loan?

Asked by Capo, 94707 Wed Feb 10, 2010

The property, which is a residential investment property, is about to go into foreclosure. If we can't negotiate a short-sale she plans to pay off the late payments and go back into repayment on the mortgage. In that case my name is still going to be stuck on this home loan and I will be at the mercy of her possibly defaulting again. If the short-sale doesn't go through and she is able to get current with the mortgage payments do I have any way to get my name off this loan?

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Gilbert Richards’ answer
The only way is to do a sale or refinance the property in her name. Now being that she is making payments it will help but she will need to come up with a down payment and you need to make sure that she qualifies (or send her somewhere to get a real pre-approval)

Other than that the options aren't too positive. Has she gotten approved for the loan?
0 votes Thank Flag Link Tue Mar 2, 2010
Capo, No there is not much you can do and short sale does not even mean your off the hook most short sales require some type of settlement amount for the deficiency.

I would start taking control of this situation, call the bank, work out a modification, find a renter that will pay and throw your friend out. Sorry you need to start looking out for yourself, your life will be hell if a short sale or foreclosure happens and your friend walks away clean as a whistle.

Ramifications of Foreclosure, Short Sale or Deed-in-lieu-of-foreclosure

Here are some of the ramifications of foreclosure, short sale or deed-in-lieu-of-foreclosure, there are many more like your job, yes employers are checking credit records these days.

Your credit score will be reduced by 200-400 points, short sale a little less 100-200 points.

All forms of foreclosure stay on your credit report for 10 years.

After you have gone through foreclosure, short sale or deed-in-lieu-of-foreclosure there will be what is known as the "waiting period", this period of time varies for each and can be reduced if you had some type of extenuating circumstances that caused the foreclosure:
Waiting Periods to Buy After Foreclosure
* Buying After a Foreclosure
The waiting period is 5 years up to 7 years.
* Buying After a Foreclosure with Extenuating Circumstances
The waiting period is 3 years up to 7 years.
* Buying After a Deed-in-Lieu of Foreclosure
The waiting period is 4 years up to 7 years.
* Buying After a Deed-in-Lieu of Foreclosure with Extenuating Circumstances
The waiting period is 2 years up to 7 years.
* Buying After a Short Sale
The waiting period was just upped from 2 to 3 years. However, if a seller does not have a 60-day late pay, that seller may immediately buy another home. It's a reason to stay current on your payments while the home is on the market as a short sale.
In addition to the waiting period, most loans require a minimum down payment of 10% and a minimum FICO score of 680. The home purchase must also be the principal place of residence, not a rental nor a vacation home.

Lastly, most loan applications will ask the dreaded question "Have you ever been foreclosed on?" this stays with you for life, many think that because it will not show up on the credit report after 10 years they can answer "no", well lying on a loan application is a felony that carries a major jail term, so be aware.

We help victims of foreclosure get their life's back in order and into a home. Want to live in your future home while we get you approved? We have a program that does just that “gets you approved”. “Get Started Now” and cut your “waiting period” in half. Visit http://www.MortgageTrainingProgram.com for more information.
0 votes Thank Flag Link Fri Feb 12, 2010
Capo,

Sorry to hear about your situation. Unfortunately there are not a whole lot of options for you in this situation. Becuase you are the one who signed the loan and the mortgage is your name, you are ultimately responsible for the loan. Are you on title at all? Is the reason the property going to foreclosure becuase the rents do not cover the expenses? Have you looked at trying to see if you can get a loan modification?

If you are able to work out a situation where the property does not go into foreclosure, you may want to consider becoming a business partner with your friend and being added to title. Unfortunately you may not be able to do anything about the loan at this point. If your friends credit is still bad then they would not be able to assume the loan. In addition depending on what the loan to value is on the property, you may not be able to refiinance. One idea you may want to explore is seeing if you can have your friend added to the loan. This would help you in terms of sharing the responsibility.

Sorry to hear about your tough situation and I hope you are able to work something out.

Hope this helps,

Lisa Cartolano
Alain Pinel Realtors
0 votes Thank Flag Link Thu Feb 11, 2010
This is why you should never agree to co-sign a loan for someone with bad credit, their bad credit will become yours unless you make the payments when they don't. Capo, I am sure you learned this lesson by now, but this is for those who read this and may not have done it yet. Seeing as this is an investment property, not your friend's primary residence, why not suggest that you be partners in this investment, and make sure that the loan gets paid yourself. Is she on the title? You are at the point where you should take control so that this does not keep coming back to bite you.
0 votes Thank Flag Link Thu Feb 11, 2010
Hi Capo,

I agree with the answers below and will not reiterate their points. Since having your name removed from the loan is not an option you should think about immediately switching gears as far a damage control because time is NOT on your side.

If you go through a Short Sale, you will be the one who gets dinged from a credit perspective, and if your name is not on title you may also be subject to taxes on the portion of the loan that has been written off - if a Short Sale is "successful". A similar "double-whammy" can occur with a foreclosure.

I would suggest you speak with a Real Estate Lawyer about your options and/or walk you through a list of options you may have. I would suggest you take what the Lawyer outlines as options to a CPA (or perhaps a CPA that the lawyer regularly works with on distressed property situations) that can help review the financial/tax implications of each option. Once this is done I would revisit with the lawyer who can construct an agreement between you and your friend based on the strategy you select, if applicable.

Best, Steve
0 votes Thank Flag Link Thu Feb 11, 2010
I am sorry, but what were you thinking! Your credit is in your friends hands. Is the property also deeded in your name or is it in your friends hands? If you applied for the loan the loan was granted, given on your credit and not yours. Unless she can refinance or you can sell the property you will be on this loan. If I was you I would figure how to rid of the property and get this behind you otherwise you will have this over your head forever.


Good Luck

Keith Manson
First Weber Group
Certified Distressed Property Expert
Metro Milwaukee

http://milwaukeebailout.com
0 votes Thank Flag Link Thu Feb 11, 2010
The only way is if you friend can refinance the loan or if it is "assumable". I would check with your lender on this loan to see if it is. Since refinance is out of the question see if your friend can "assume the loan" an if that option is not possible then you are going to have to sell the house. Short Sales are getting much easier thought today with an experienced short sale agent. I have done short sales in 30 days(for the approval). Here is some more information on my short sales expertise if I can be of any assistance.

http://www.vgrouphomes.com/atj/user/AdditionalGetAction.do?p…

John & Sarena Villaescusa
Keller Williams Realty
Owner/Realtor/Broker
Cell: 562-818-2671
Email: Johnv@kw.com
Website: http://www.VGroupHomes.com
Web Reference: http://www.VGroupHomes.com
0 votes Thank Flag Link Wed Feb 10, 2010
I think you are stuck. Its actually your loan. its unlikely there is a graceful exit for you. so sorry.
0 votes Thank Flag Link Wed Feb 10, 2010
I only see one way.

SELL the house.
0 votes Thank Flag Link Wed Feb 10, 2010
You are the party responsible for keeping this loan current, and there's probably no way around it.

I know you'd like to find that possible way around it, but I don't think there is one.
0 votes Thank Flag Link Wed Feb 10, 2010
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