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Can I Be Let Go of Liability?

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Posted On: 03/24/2010

QUESTION:

Can I get a qualified assumption that releases me and other borrowers on the loan from all liability so I can qualify for another mortgage?

ANSWER:

A “qualified assumption” generally is seen as a situation where a lender allows an existing loan to be taken over by another borrower who is acceptable to the lender. If you have a lender who also will provide a release of liability, then the original borrowers no longer have any obligation to repay the debt and thus have no further liability. However, will the lender provide such a release? In some cases lenders will allow new borrowers to assume the loan payments – but only if the original borrowers remain responsible for repaying the loan. That way the lender has both the original borrowers and the new borrowers to chase if the loan is not repaid in full.

For specifics, speak with your lender. Have a real estate attorney review lender paperwork before signing, get the release in writing and make sure all existing borrowers are covered. In addition, ask your attorney what changes will be needed in local property records to reflect the release.

QUESTION:

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I submitted a loan modification request to my mortgage company back in June of last year. They advised me in early December that my request was denied, but then they said that they do not send anything in writing to explain why my request for a loan modification was dumped. Are they not obligated to send me a written explanation showing why they denied my request?

ANSWER:

Treasury representative Meg Reilly tells us that “beginning in 2010, servicers are required to provide denied borrowers a letter stating the reason for the denial. Many servicers have been doing this for months in advance of this requirement.” Alas, the lender may have beaten the disclosure deadline in your case. For information go to MakingHomeAffordable.gov.

Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to peter@ctwfeatures.com.

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