Many borrowers find themselves in circumstances when their name is on the title of a home, but not the loan. When these properties go into foreclosure, borrowers in this situation always wonder how the foreclosure will effect their credit. Another fear is that the servicer can pursue them to repay the loan because their name is on the deed.
There are also many cases where co-signers are not on the deed, so they don't think they can be hurt from the foreclosure. In the case of the co-signer, they need to be very concerned, because they are 100% responsible for repaying the mortgage. The servicer can pursue them for a deficiency judgment and the court can possibly require them to pay back the mortgage. If you are a co-signer, stop reading now and find assistance right now; you need it! Otherwise, keep reading.
I've been working with foreclosure victims in. In general, the largest downside to borrowers in this situation is that they will lose the home and any equity they have in it.
Most of the time, if you never signed an agreement to pay the mortgage, the servicer will not be able to get a judgment or lien against you. They may try to call and threaten you, or send collectors after you, but in the end, you are not forced to repay a mortgage you never agreed to.
But, If you agreed to the original mortgage agreement (or any agreement later) and then had your name removed, you may still be responsible and the servicer could try and collect from you. Also, if the servicer paid taxes on your behalf, I would expect them to try and collect them from you, but I wouldn't expect a court to allow them a lien or judgment.
If you have found yourself in this situation and you're worried about the servicer coming after you, it's best to speak with a professional to find out what options you may or may not have. In many foreclosure situations, you may be able to save the home, with a repayment plan, or mortgage modification. There are also several legal "loop holes" for people in this situation that can help borrowers stay in the home much longer.
Even if your name is not on the mortgage, make sure to do plenty of research so you know about all your options.
If you want to try and save the home, adding your name to the mortgage may be a possible way to get approved for a mortgage modification. This is when the terms of the mortgage are changed and the payments can be drastically lessened. The reason adding your name to the mortgage may help is because your extra income may be enough to make the home affordable. But this is a drastic step to take and could be dangerous if the loan modification is not 100% approved and affordable. Make sure that you always speak with a professional before making this decision.
Nick writes for the ForeclosureFish website and blog, which educate homeowners on how they can avoid foreclosure and beat the bank. The site describes nearly a dozen ways to prevent losing a home, including
filing bankruptcy, foreclosure refinancing, defending foreclosure in court, and others. Visit the site today to read more about how foreclosure works and learn how to fight back against foreclosure: http://www.foreclosurefish.com/
