Novation - Release the liability from the loan

hi,

novation is a release of liability of a loan and the substitution of the borrower with the lender's approval.

i guess they have meant that to you.

Hi,

Welcome again.

I am confused with your statement. If the bank removes your name from the mortgage then, how you can still be held responsible for the debt?

If they want a novation, you must be aware that through a novation the old borrowers are replaced with new ones under the same obligation.

So after novation you will not be responsible for the loan again. Do check with the bank exactly what they are telling you to do.

Kindly get back here if you have any confusion after that. We will try to help you as much as we can.

God bless you.

For MortgageFit,
Samantha

If during a divorce, the husband is required to give property to the wife; the wife is responsible for making the mortgage payments, but the mortgage is 100% in his name - is there anything that he can do to protect himself?

Hi Leea,

Welcome to MortgageFit Forums.

Although in the divorce decree it remains mentioned who is going to get the property and will be liable to pay the mortgage, it doesn't bind the creditors.

The creditors can get back to the husband (in your case) if the mortgage payments are not made. To remove the name from the mortgage he needs to either go for a novation or refinance the mortgage in her spouse's name.

It's best to settle these matters at the time of divorce. The divorce attorney can guide in this matter. Even if it is not settled at the time of divorce the mortgage should be transferred to his wife's name as soon as possible after the divorce to avoid future trouble.

Feel free to ask if you have more doubts.

God bless you.

For MortgageFit,
Samantha

A tenent in a home my friend owns has not paid rent since last October. They almost pursued eviction (in March), but the tenent claimed she was attempting to obtain financing to purchase the house, so unfortunately, my friends stopped the eviction. This eventually turned into the tenant attempting to assume the loan -- in which she presented an assumption packet to the owners and slipped in a quit claim deed instead of another form. The tenant in turn submitted the QCD to the county, and now holds the deed in her name. The house has since gone into foreclosure, the tenent has paid nothing, and she hired a real estate agent to sell the house. The Real Estate agent fled rather quickly upon finding out about the true story. Now the "owners", my friends, the current mortgage holders are in a bind about what to do now.
In trying to help my friend out, I have been researching options for them. I found your website this morning. I have never heard of novation. Could this be an avenue to explore?

hi, Kph

novotaion can be a handy option but the 1st thing i will suggest you is to look at all the possible option s before taking any decisions.

As getting the property back after quit claim is a very tough job.

I have been divorced from my ex-husband for a couple of years now and just recently requested a copy of my credit record from the credit bureau. When I received the report, it showed that the home we had together is still listed jointly on the mortgage...however he has always made the payments to the creditor, and it shows that he has only been late once in the last 10 years. I thought he had removed my name from the loan after the divorce but now I am finding out he hasn't. I would like to have my name removed from this loan and I have mentioned that to my ex because I have since re-married. I was reading about a NOVATION. What exactly is that and what steps do I need to take to start a novation. Will that remove me from the loan? I am the co-buyer on the loan. Also my name is on the deed. I dont think he is in a situation right now where he can re-finance right away is why I am asking about a novation. Thank you so much for your help.

dee...you said your name is on the deed to the home you no longer occupy.

i gather that your divorce settlement made no mention of removing you as an owner or requiring your former spouse to refinance the property.

novation, which requires yours, your former husband's and the lender's approval, will eliminate you from liability on the mortgage. it would be beneficial to you to discuss this with him and presenting the question to the lender, assuming that you and he are in agreement.

My brother n law wants to quickdeed his home to my husband and my self i understand this will only deed the property over to us. My question is our crerdit is not the best if the lender refuses to refinance so we can transfer mortgage over in our name what will happen then? Will my brother n law still be responsible for that mortgage and if he refuses to stay on mortgage will my husband and myself have to quickdeed the property back to him. And would my brother n law still have any authority over the property if his name stays on mortgage?

Yes, your brother-in-law will be responsible for the mortgage even if he quitclaims property to you. I'd like to know who is there on the mortgage.

if i want to go through the process of novation.how do i ask the lender

Hi Terrica!

You can directly speak to the lender and tell the person that you want to change the ownership of mortgage by the process of novation. But let me tell you one thing - the lenders generally prefer refinancing. If you want to go for the process of novation, you will require the lender's approval.

Feel free to ask if you have further queries.

Sussane

I went through a divorce almost three years ago, from a physically abusive and manipulative man. He (my ex) told me that I needed to sign a quitclaim deed in order for him to re-finance the real property. So I did. From what I am reading here...that is not true. To this day he has not re-finance the real property.
In the divorce decree under Real Property it is stated that "the property is awarded to him free and clear of any claims of interest of the wife, subject to any encombrances theron."
Under Transfer of Property and Debts it is stated that "Within in 30 days (30) days of the date of this judgement, each party shall execute, acknowledge and deliver whatever documents are necessary to accomplish the distribution of debts and property ordered by the court. The judgement shall operate to convey title to the party awarded the property if the other part fails to comply with this judgement."
Do I have to just wait until he gets good and ready to refinance or sale in order to get my name remove from the mortgage? The last I talked to him he was behind on his payment, because he lost his job.

Hi I just want to know if it would be easy for a bank to agree to novation if the have records(checks) showing that I'm the person that has been paying the morgage and my name is now on the tile.

Welcome william villalona,

It will be the bank's discretion. May be they would agree if you show them the records. However, the banks prefer a refinance.