I am familiar with Alabama law in this regard. Why does this matter? Because believe it or not, Alabama law was initially constructed from New Jersey law and follows many New Jersey precedents.
So... In Alabama, a married person who incurs a mortgage must have the spouse sign the mortgage of a principal residence even if title to the property is held only by one party.
There are three basic parts to this transaction: A Deed, A Promissory Note, A Mortgage
So it looks like this:
Title or Ownership in the property: John Doe (on the deed as owner, it will say John Doe, a married man. This serves as notice that the mortgage must be in both names)
Promissory Note and security agreement: John Doe, promise to pay $xx for xx payments at xx interest rate secured by mortgage note dated etc.
Mortgage, which is the security instrument: John and Jane Doe.
In the event of foreclosure: Only John Doe is foreclosed upon and only John Doe suffers the ding from the foreclosure.
The morgage company responded correctly, the "security instrument" mentioned by the lawyer is the mortgage, but since she is not obligated by the promissory note, they would give her no information. So she is not responsible for the promissory note, she has given her permission for the security interest in the property by executing the mortgage agreement or "security instrument." They cannot go after her for any deficiency balance, because the extent of her involvement was giving permission for the security interest, not making any promise to pay (the promissory note)
So right now she has no rights to the property either as an owner or obligor. Her attorney can likely prepare a document rescinding her interest in the property as a spouse and have it blessed by the judge. Nothing will appear on her credit report. If it does it will be removed.
Finally, all the documents are public record and can be pulled by her from her county probate web site (free) or by her lawyer (fee).
@DallasLoanGuy wrote:
the 'security instrument' is the deed. that is what ties the property to the loan.
she might be just fine. she never promised to pay(didnt sign note).
but if there is a deficiency balance, i bet they try to go after her
