Question: I’m wondering if the bank can wreck my credit for my spouse’s foreclosure?
This story takes place in Florida.
My wife was divorced for two years when we got married. She had purchased a home with her ex-husband, and because he had lousy credit, hers was the sole name on the mortgage. However, both she and her now ex-husband are on the deed.
When they split up, she moved out of their marital home, which her ex-husband still occupies and made the mortgage payments on–until January, when his business collapsed, and he hasn’t made a payment since.
My wife and I have lived together for a year, ever since we got married, in a home we rent together.
The mortgage company has already started the foreclosure machine to take back the marital home which she left. Of course, there’s no way her ex-husband can save it. Thanks to the on-again off-again payments her ex-husband was making to the mortgage company, my wife’s credit is now obliterated. Now she will have a foreclosure on her credit as well, thus torpedoing any chance we might’ve had of buying a house of our own.
My question is this: Can the bank attack my credit as well, even though I’m not on the mortgage, and had nothing at all to do with the property, but am “guilty by association” for being married to the person who “is” on the mortgage?
My common-sense feeling tells me that I’m safe from attack by the mortgage company. However, when the foreclosure paperwork was being served by the bank’s attorneys, “both” my wife’s and my name were on it. That spooked me out a little. Could the bank’s lawyers try to come after me, since, because we’re married, we count as one financial unit?
Any insight would be appreciated.
Cheers!
Answer:
No, you are fine. The home is only collateral for the loan. When they foreclose, it only affects those who’s name are on the loan, not on title. So you will be fine. Her ex will be fine as well if his name is not on the loan. Your wife is the one who is stuck with the foreclosure on her credit. This is why “subject to” investing is so popular. Investors can take control of properties without any credit risks.
Hope this helps.