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Posted by JanetK_CA on 7/26/11 2:58pm
"Wonder if it even matters ...?"
It could. I've posted about this before, but I once had a signing with a couple where the wife was not on the loan, but on title. I don't know if the husband was ill (no obvious signs), but she was very adamant about knowing what the consequences would be to her if something happened to her husband, as she didn't think she could qualify for the loan on her own. We couldn't reach anyone, as this was a Saturday closing, but they did manage to call an attorney friend of theirs.
Upshot was (and I don't know if this is correct or not, just one attny's opinion), that the loan wouldn't automatically be converted to her name and that she might not be able to just continue making payments (if she could even afford to). The lender might be able to require her to sell the house to pay off the loan, since she wasn't named on the Note.
That was a possibility that had never occurred to me - and it seems to me that most borrowers feel the same way. I had one like that yesterday. Loan was in husband's name only and they were joking around about her at least not having to be on the hook for the payments. Of course, I didn't say a word, and that's probably true as long as he is alive, but it does make me wonder about how many people (mostly women) are going to find themselves with a rude awakening some day.
Does anyone else have any insight into the issue? (For our own personal knowledge - NOT to be discussed with borrowers!) It's probably another thing that will vary by state.