topic Re: Bank wants Name OFF in Mortgage Loans

Bank wants Name OFF

Anonymous — Mon, 18 Jul 2011 17:57:00 GMT

I really hope someone here can help answer a question for my husband and I.

Our current loan rate is 9%.. We called to look into a lower interest rate and here is what the bank said,

They want my husband to remove my name from the loan documents... We are still married and have no intentions of divorce.

My daughter said, "Don't do it. If something happens to Dad you would need to apply for a loan on the house to keep it and dropping your name off the loan will lower your credit score. You will not be able to obtain a loan on the house."

Can anyone offer some insight here?

Thanks,

Re: Bank wants Name OFF

203bravo — Mon, 18 Jul 2011 18:31:53 GMT

The only reason for them to suggest this move would be for a lower rate if your scores are lower than his. So you would need to weigh the savings of the two mortgages models and make your decision.

Re: Bank wants Name OFF

Lel — Mon, 18 Jul 2011 19:14:49 GMT

@Anonymous wrote:
I really hope someone here can help answer a question for my husband and I.

Our current loan rate is 9%.. We called to look into a lower interest rate and here is what the bank said,

They want my husband to remove my name from the loan documents... We are still married and have no intentions of divorce.

My daughter said, "Don't do it. If something happens to Dad you would need to apply for a loan on the house to keep it and dropping your name off the loan will lower your credit score. You will not be able to obtain a loan on the house."

Can anyone offer some insight here?

Thanks,

Hi Peckkale, and welcome to the FICO Forums.

What are the FICO scores for both you and your husband? Is there anything of concern on your credit reports that makes your loan officer worried that you might not be approved?

If your husband refinances in his name alone, that won't necessarily cause your credit score to drop. The original, closed mortgage will continue to report on your credit reports, and assuming that it is an account in good standing, then it will reflect positively on your score. If the current mortgage is your only open installment loan, then your score could dip a little, but it's highly unlikely to be a significant or irreversible drop.

I'll let the mortgage pros answer the question about mortgage assumptions (if that's the correct term) or refinancing in the event of the death of a non-borrowing co-owner of a house.

Re: Bank wants Name OFF

Anonymous — Mon, 18 Jul 2011 22:43:29 GMT

Well that's what we really don't understand. We were shopping for a car on Sat and was told my credit score was higher then my husbands, We decided that if we refi the house at a lower interest rate the new car would be more affordable. Not looking to take out equity or anything like that. we just wanted to see if lowering the interest rate would make a difference in the payment.. Terms are 15 yrs at 3.7 The current loan is 15 yrs left on the mortgage at 9.25% But like I said, The loan manager said my credit is 'poor' and his, my husband's is good. Makes no sense as all purchases are joint credit.

We did buy the new car and the credit report stated a difference of only a few points between us.

Re: Bank wants Name OFF

Booner72 — Mon, 18 Jul 2011 22:59:09 GMT

Maybe they used an auto-enhanced score at that dealership??

Re: Bank wants Name OFF

Anonymous — Tue, 19 Jul 2011 00:33:18 GMT

Update....

I have an attorney in the family and earlier today I put a call in to ask about this removal from the loan. Here's the response.

"NO.. Do NOT sign a loan under those terms. At closing they would be sneaking a Quit Deed into the stack of papers and will remove your name from the title of the house. The loan company does not need red-tape of having you on the title but NOT on the loan. It would become a huge mess in court. You would lose your interest in the home even though you are still married, still living with your husband, still pulling in an income, and still contributing to the payment of the house... Don't do it. Instead pull a copy of the credit reports and see what is listed that may have pulled down my score. Being that ALL credit is JOINT credit there would have to be an error."

So that's what our next step will be.

I am still interested in knowing if anyone has encountered such an issue and if it turned out good or disastrous.

Re: Bank wants Name OFF

Anonymous — Tue, 19 Jul 2011 00:40:43 GMT

Not true. My wife refinanced several years ago WITH OUT my name and I am still on the deed.

Re: Bank wants Name OFF

Anonymous — Tue, 19 Jul 2011 00:53:20 GMT

Thank you for your input.

If you don't mind my asking. Do you carry special insurance on the home in the event something where to happen to her??

Re: Bank wants Name OFF

Anonymous — Tue, 19 Jul 2011 00:58:21 GMT

You should also find out what would happen to you financially in the event that you did get a divorce (it happens, a lot). If you don't live in a joint property state, then if your name is not on the loan and gets removed from the deed, you could get completely screwed in splitting the assets. Stinks to think negatively, but you should also protect yourself.

There is a discussion board on this site for money and marriage. It might be a good place to ask this question as well.

Re: Bank wants Name OFF

Booner72 — Tue, 19 Jul 2011 01:30:30 GMT

I'm doing loan without DH - I was told he will be on the title so if I drop dead he still gets to keep the house. I was told that if we needed to do a HELOC or refi at some point, he will have to do that loan with me tho. By then, his child support hell will be over and it won't be a problem. I do NOT live in community property state, and am glad for it.

Re: Bank wants Name OFF

Lel — Tue, 19 Jul 2011 04:23:16 GMT

I think you simply need to ask the lender the rationale for removing you from the loan application. Otherwise, all you have is speculation and suspicions.

Having a loan refinanced in one person's name alone is not a complicated issue at all, and is something that loan companies deal with on a daily basis. All that is necessary to complete the loan is for the non borrowing title holder to sign a form indicating that he or she gives permission for the sole borrower to open a loan on the property. My wife and I did this a few years back when we refinanced a home equity loan in my name alone. It took less than a minute to sign the form in the presence of a notary - that was the extent of the red tape.

Even if your name was removed from the title during the loan closing - and if you are reading the documents that you sign, this shouldn't happen without your knowledge - it's not a big deal to add yourself to the title later.

Talk to your loan officer. Ask for an explanation of his recommendation to remove you from the refinance application.

Re: Bank wants Name OFF

Anonymous — Tue, 19 Jul 2011 16:22:19 GMT

This is where you are wrong. He will not 'get the house' He would need to apply for a loan on the outstanding balance or use any insurance/savings to pay off the outstanding balance.

This is what the attorney said, "You don't sign away your rights to the loan by having your name removed. If something happened to him and you don't have enough life insurance or savings to pay the outstanding balance, then you would need to refi... You could end up being DENIED because of any number of reasons.. Age, Lack of enough income, Credit history."

Decision is... **bleep** the banks. There will be no snap decision and we will live with the higher interest rate. We are pulled the credit reports to see what is going on.

Re: Bank wants Name OFF

Anonymous — Tue, 19 Jul 2011 16:53:03 GMT

Oh I can't believe this bank! Said we have poor credit because we don't have ENOUGH credit. They suggested we get a credit card!! How stupid is that!

We have our car loan and our house loan! We do not need, nor do we want a credit card loan. OMG! I have bad credit because I don't have a credit card!

Re: Bank wants Name OFF

ShanetheMortgageMan — Tue, 19 Jul 2011 17:12:21 GMT

Unless you are applying for a reverse mortgage and you are not 62, your loan can't be denied because of age - it's in the Equal Credit Opportunity Act. Does your attorney have a thorough background with real estate/mortgages?

Hoewever you should get your scores here at myFICO.com - you can get your Equifax score which will be identical to what a mortgage lender will pull, and you can also get your TransUnion scores here but it uses an older scoring model (Classic 98 vs. Classic 04) than mortgage lenders use so it won't be 100% accurate, but it should be in the ballpark. If your scores are the same or better than your husbands, then I believe the issue with this particular lender is that they require you have a certain amount of trade lines/history from each individual on the loan. But that is not the case with all lenders, so if your scores are good then I'd suggest you just try a different lender.

Re: Bank wants Name OFF

MBOhio2 — Tue, 19 Jul 2011 19:43:20 GMT

Peckkale - I know it seems unfair, but it is what it is. Lenders want to see that you can handle a mix of credit responsibily in order to feel confident about your risk level. It's also about statistics and based on millions of people's credit history, the stats show that people with a good history of using credit cards are lower risk than people without them at all. While a mortgage and auto loan does feel like it should be enough, a lot of people get in trouble with CCs, so it's important for lenders to see that you can be responsbile with them.