Posted on: 16th Mar, 2009 08:29 am
our attorney advised us to check to see if our credit can be negatively impacted before we proceed with her response to lis pendens/civil summons. husband put up 10% downpayment on investment condo in naples fl with his son's fiancee in 2005. he is not on the note and is on deed with her. we were served 03/04/09 with lis pendens (me as "unannamed spouse" since he is on mortgage). son and she now married and efualted on payment july 2008 (attempting a short sale and advised to do that by some realtor). should husband do a quit claim deed? can we be liable for any deficiency decree that may occur? (mortgage is $316,000;short sale offer (ignored by bank) for $70,000).we are willing to walk away (never see the 10% silent partner investment) and know he will not see profit from this. daughter-in-law and son are basically ignoring this and hoping it all goes away. she is only one on note. husband and i must protect ourselves. what is best course of action? can this negatively impact his/my/our credit? thanks to all reponders!
Hi naplesbridges,
Lis pendens implies lawsuit pending. This is filed by the lender's attorney in the land records to indicate that a lawsuit is pending on the property. However, if your husband is on the loan, his credit will definitely be affected. But if he is only on the deed and not on the loan, I don't think it will hurt his credit. If she is the only one on the mortgage, then she will be held liable for the deficiency decree. A quitclaim deed at this point will not be a good option as it can be considered as fraudulent coveyance and can be reversed by the lender.
Lis pendens implies lawsuit pending. This is filed by the lender's attorney in the land records to indicate that a lawsuit is pending on the property. However, if your husband is on the loan, his credit will definitely be affected. But if he is only on the deed and not on the loan, I don't think it will hurt his credit. If she is the only one on the mortgage, then she will be held liable for the deficiency decree. A quitclaim deed at this point will not be a good option as it can be considered as fraudulent coveyance and can be reversed by the lender.
He is on the mortgage since he is on the deed, but he did not sign the promissory note. Section 13 of the mortgage says only "borrower" is obligated for debt. A credit counsleor said lender cannot report any adverse credit information on anyone other than who is on their note but I just can't seem to find out for sure (even our attorney wanted that answered before she decided how to proceed for us. I also worry that 'The machine" will just steamroll and all named on summons will take the hit with daughter in law who now says she will either "walk away" or file bankruptcy. Shoudl husband sign DIL to bank? He is not borrower and it seems only she should do that?? Very confused and scared.Thanks for any help.
Hi naplesbridges,
"He is on the mortgage since he is on the deed, but he did not sign the promissory note."
I'm not sure how that was possible. But anyway, as his name is on the mortgage, I think it will surely hurt his credit. A deed in lieu can be a good option, but creditwise, I don't think it will be any better. A deed in lieu will drop your credit down by almost 250 points. Instead, you can try doing a short sale as it will hurt your credit by only 75-100 points. However, you may have to pay the deficient amount arising out of the short sale.
"He is on the mortgage since he is on the deed, but he did not sign the promissory note."
I'm not sure how that was possible. But anyway, as his name is on the mortgage, I think it will surely hurt his credit. A deed in lieu can be a good option, but creditwise, I don't think it will be any better. A deed in lieu will drop your credit down by almost 250 points. Instead, you can try doing a short sale as it will hurt your credit by only 75-100 points. However, you may have to pay the deficient amount arising out of the short sale.