Posted by ikando on 4/19/13 2:00pm
Msg #466358

Mixed feelings

Got a call for GNW. Woman caller needs divorce paperwork notarized, including an affidavit from her soon-to-be-ex that she can discuss the mortgage with the bank.

Seems she and her husband had refi'd a house which she owned when they married. Problem is, she is on disability and his was the income used for the refi. The divorce decree says each is to take what they came into the marriage with, but she can't have her house because the note is only in husband's name.

Apparently a notary had brought the paperwork for the refi to her home, and she apparently signed the appropriate NBS forms, but didn't understand that she could potentially lose her home under the divorce scenario.

Makes me want to comment to a non-borrowing spouse about potential issues, even knowing that's not part of my job. I just feel for this lady.

Reply by CJ on 4/19/13 2:07pm
Msg #466359

I understand.

I wonder if he said, "Don't worry honey, it's still your house because we are married". I think the title company or the loan company should have spelled it out to her before they go to the refi notary.

Reply by Linda_H/FL on 4/19/13 2:11pm
Msg #466361

'but she can't have her house because the note is only in husband's name."

Who is on the note is of no consequence - it's who's on title. Hopefully she put the house in both their names and not just his so all he has to do is Quit Claim his interest back to her - unfortunately the house is still going to be encumbered by the mortgage - she's either going to have to refinance it and get him off the note, or see if the lender will let her assume the note on her own merits.

Sad situation.

Reply by ikando on 4/19/13 2:15pm
Msg #466362

From the conversation I had with her, the title is only in the husband's name, which is why the bank won't discuss anything with her.

Reply by Linda_H/FL on 4/19/13 2:21pm
Msg #466364

Well, if they're ordered by the Court to have

everything they came in with - looks like he's paying off a mortgage and giving her a house, or giving her the cash equivalent of the house.

This could be a very expensive divorce for him...

Again..so sad

Reply by SharonMN on 4/19/13 2:24pm
Msg #466365

Whenever I present a deed to be signed, I state that the deed changes the the name on the title aka who owns the house and ask the grantor specifically if that is what they want to do. Sometimes I even say, "So you will no longer own the house." I don't get into why the borrower is being asked to amend the title or whether or not it's a good idea, but IMHO it's far too easy for the borrower to think the deed is just another loan document in the stack (and sometimes the title company/lender doesn't even discuss it with them ahead of time!) I want to make sure they are signing such an important doc of their own free will and know what it is. I almost think that it should be illegal to have a deed in with refi documents - that the borrower should have to do the title change as a separate transaction prior to signing the loan.

Reply by Linda_H/FL on 4/19/13 2:27pm
Msg #466366

"I almost think that it should be illegal to have a deed in with refi documents - that the borrower should have to do the title change as a separate transaction prior to signing the loan."

I agree 100%. Having it at the table in the docs is telling them at the 11th hour that it's required - you now have them backed into a corner and by that time at the table they have no choice but to sign.

Reply by Philip Johnson on 4/19/13 2:39pm
Msg #466368

Do they allow notaries to give advice in MN?

They certainly don't in Washington, and I cannot imagine saying "So you will no longer own the house." because I don't have any standing to make that statement.

I can appreciate your feelings in the matter, but if you have concluded that they have the capability to sign the rest of the docs, why do you feel they don't have the capacity to sign this one?

Reply by jojo_MN on 4/19/13 3:02pm
Msg #466372

Re: Do they allow notaries to give advice in MN?

We are not allowed to give advice, but we are allowed to explain the documents and the loan terms to the borrower. In Minnesota, you MUST have a Closing Agent license to do this.

Reply by Jessica/FL on 4/19/13 3:03pm
Msg #466373

Re: Do they allow notaries to give advice in MN?

I agree! I would never say, "So you will no longer own the house." If the borrower has any legal questions about the documents they are signing, they should contact a lawyer. In almost all of the loans I sign, there is a statement that escrow cannot give legal advice and if they have questions, to contact a lawyer.

Reply by JanetK_CA on 4/19/13 3:47pm
Msg #466380

Re: Do they allow notaries to give advice in MN?

I wouldn't use those words, either, but I do show them the document (sometimes read key parts of it to them) and that the document is changing the title from XXX to YYY. I think they need to at least have an opportunity to know what they're signing and that it's not just another disclaimer from the lender.

As for the Note, even if the wife was on title but not on the Note, I believe it could potentially still lead her to not be able to keep the house. This might also depend on state laws (or not), but I've been told that if the loan is only in the husband's name, a lender may not allow the wife to simply take over the payments - even if he dies - since she didn't go through the qualification process as he did. I would NEVER discuss this with the borrowers at all, and if they asked I'd strongly recommend they get legal advice. But I have run into a very few who were smart enough to research this. More often, they will will make some joke about the spouse not being obligated to make the payments, but that's a huge oversimplification - and certainly something we never want to be saying to a borrower or borrowers ourselves.

Reply by Notarysigner on 4/19/13 3:01pm
Msg #466371

In Calif there is a

mandatory settlement conference in which things like this are worked out. There would have been an interspousal grant deed. In order to own the house as a sole and separate property, that would have had to be signed and it would have said so on the deed.

I do quite a lot of Settlement agreements so it wouldn't matter because have his income is hers anyway. If he paid the note (he'd have to prove it) then usually she would have to give him back 1/2 from the time of the loan if they couldn't work it out otherwise.

Very sad.

Reply by ReneeK_MI on 4/20/13 4:42am
Msg #466412

One tiny point to make in this complicated issue

The lender can't discuss the loan with her because she is not a borrower - it wouldn't matter if she was on title or not. You'd previously said she'd signed as a Non-Obligated spouse - so, not a borrower, not a customer of the lender, can't discuss w/out written authorization from the actual customer.

Reply by desktopfull on 4/19/13 4:10pm
Msg #466383

This situation is why they have prenuptial agreements,

I absolutely wouldn't discuss the potential issues with another similar situation, IMHO, that falls into UPL territory.

Reply by BobtheElder on 4/19/13 4:24pm
Msg #466387

I wouldn't discuss it in any way at a signing. I am, after all, not an attorney.

I am a real estate investor though, so there are a few ways around this (stepping into the gray area here...) ...There is nothing stopping her from getting a quitclaim deed from him back to her. The mortgage company certainly wouldn't approve, if asked, but the title and the mortgage are two separate things. There used to be a few big real estate investment gurus who taught investors to take over a deed "Subject to" the existing mortgage, record the new deed and just not tell the mortgage company and the process worked as long as the payments were kept up.

After all, the mortgage company can keep accepting payments or forclose... they only have the two options here. Of course, she needs to keep up the payments or make sure that he does so... that could be the sticky part. Maybe it's illegal now, but back then it was a simple breach of contract (on his part in this instance)