Hello loan pros,
I have been researching solutions for divorcing couples who are underwater on their mortgages and need to get one party off the loan obligation. Unless they are destitute or behind on their payments it seems like no lender in its right mind will restructure the loan, approve a short sale, or let one party off the hook. I thought perhaps Fannie’s Keys to Recovery program might work in this case, allowing a qualified partner to refi a Fannie loan to 120% of the current value and get the other spouse off the loan. However, I can’t find any actual program guidelines. And from the documentation out there it looks like this is offered as a streamline only — which would I think make it unavailable to couples who want to drop one party from the loan.
Any news / advice?
I have had this situation before and was unable to remove the spouse. I wish I could find the answer as I suspect there will be more people wanting to do this.
From what I know of this, only thing you can do is to sign a quitclaim deed, but leave both names on the mortgage.
Often couples contemplating divorce will be late on their payments. This will impact their credit scores and will result in inability to borrow in the future.
If anyone finds the answer let me know. This is exactly the boat I am in and have a balloon payment due in 2011. Monthly payments are not behind but can’t refinance due to underwater mortgage.
Hello all, let me start out by telling you I am a lender, but do not hold that against me. There are ways to take care of the situations you are in. Both Fannie Mae and Freddie Mac have programs for refinancing homes that are “underwater”, Fannie Mae’s program is the “DU Refi Plus” and Freddie Mac has the “HARP” loan. The first thing you want to do is find out which if either own your loan. You can do this on their websites. http://www.efanniemae.com and http://www.freddiemac.com all you need to know is your address and in freddies case your social security number.
Once this is established it’s pretty much like a normal refinance minus the LTV restriction of 80%, meaning you can refinance past 80% without the need of mortgage insurance. If you have a second on the property it can be re-subordinated. Of course both programs have specific guidelines to lengthy to discuss here, but I or another lender you trust should be able to.
Dan
Emcore Mortgage, LLC
http://www.emcoremortgage.com
P: 678-626-0318