When married people buy a home together, they sign up for repayment of the mortgage, together. What can be confusing for some couples is that divorce agreements that one party is no longer responsible for the mortgage loan do not have the effect that the parties may think it has.
It is important for parties to divorce to realize that quitclaiming a property from one owner to another does not do away with either party’s obligation to pay. If both parties signed the promissory note to the lender, agreeing to jointly repay the mortgage loan, then they are both jointly obligated to do so.
To put it another way, parties may decide in a divorce agreement that one will be responsible for the mortgage payments and take possession of the home, but that act of donation does not concern the lender with respect to who is actually responsible to repay the loan.
The fact is that there are no documents that homebuyers sign which say that if the home is sold or given away, the lender may no longer pursue the parties for the debt. Generally speaking, the only way to get one’s name off the loan to a home is to have the loan paid off.
There are some rare situations where a party may be able to able to have the lender remove their name, but the lender would usually not agree to do so unless the home value exceeds the loan amount or the lender has a business relationship with the spouse retaining ownership of the home. For most people, though, there is little chance of having their name removed from the loan.
It is also important to remember, though, that divorce decrees can be enforced as contracts in court. So, if one party is required to pay the mortgage loan and they don’t, the lender can pursue either party, but the spouse that got the shaft will be able to enforce the decree in court. Of course, it helps to work with an experienced attorney in doing so.
Source: The Washington Post, “Giving up interest does not free you from mortgage obligation,” Ilyce R. Glink & Samuel J. Tamkin, April 12, 2013