She, on the other note, can not purchase the house from him. Short sale transaction has to be arms length, meaning no relative, friend or an entity that has a mutual interest or a relationship with the seller can not purchase the property.
Very important to note is that you never want to quit claim your interest in a property or relinquish ownership rights if you remain on the note. You could be completely out of control regarding the property, ownership rights, etc. while remaining responsible for half of the loan. Not a good position to be in.
I do not know of any way to indemnify a co-borrower from negative credit reporting when they are listed as a responsible party on the note. So sorry. If anyone knows of a method to allow one borrower to be immune to credit hardship, I'm all ears. Best to you...
Diane Wheatley, Broker
If the house isn't extremely underwater & your female cousin wants to keep the house, she can try to get a loan modification, in getting a loan modification it could be possible if her income his high enough & can support a modified payment on her own, she could get him OFF the loan, if she has experienced increases in her income over the past 11yrs.
On the subject of the loan modification itself. They aren't working out too well. Banks are not real interested in doing loan modifications. If they were, the foreclosure market would be just about dried up & you wouldn't still be seeing sooooooo many foreclosures & short sales out there.
Be wary of hiring anyone or paying up front for loan modification services, I've many clients do this, only for the bank to keep misplacing or constantly asking for another paystub, another paystub another bank statement, we lost the other one. The banks stick them in a "Trial Modification Period" only to have that go on for 6mos-12mos & then the bank denies that & urges you to go for a short sale.
Only 5% of loan modifications are working & even those are mostly short term rate reductions.
If you would like me to give you an honest opinion on what the home is worth right now please do not hesitate to contact me via email or phone.
Having purchased the home 11yrs ago, I can't imagine it's that much underwater unless your cousin cashed out some equity, in which case I would like to tell you about how the banks are handling equity loans in a short sale situation.
Realtor Since 1996
Short Sale Expert
He needs to find out the cause of her delinquency and her ability to continue paying on a new modified payment based on the current loan balance. If it doesn't look good they need to sell the property immediately. Every month that goes by is another mortgage late on his credit regardless of him being on title or not. Keep in mind that if she gets the government's modification program the first 3 trial payments are still considered partial payments until the loan is permanently modified.
Because both names are on the loan, the bank will look to both people for payment and if it goes into foreclosure both parties will suffer.
First time I have heard that one. But I have heard of something related.
My guess is the banks will see through this and still go after him. He was the primary and the NOD was filed while his name is on the deed. If he tries to get his name off, they will suspect bank fraud. They won't care if he lived in it or not. And they won't care if they are still together or not.
The best bet is to do a short sale. Otherwise, both are going to have their credit dinged.
Tommy Lee SFR (Short Sale and Foreclosure Certified Realtor)