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Permalink Reply by Harry Clay on December 2, 2011 at 12:58pm

Isn't modification a voluntary act, on both sides?

If the current owner wants to change the terms of the contract, I see no reason why the bank couldn't or shouldn't now require the 2nd person on the Deed to sign on to the modified note, going forward.

If the owner doesn't want his wife on the note because he's afraid of the consequences should he default in the future, then leave the note the way it is.

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Permalink Reply by Brian Avery on December 2, 2011 at 6:41pm

Clients have to qualify for loan modifications similar to a mortgage . Adding the wife may be the only way for the couple to qualify?  I do not see a problem with Cit doing this anyway since she is currently on title and has ownership.

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Permalink Reply by Chad Gelsinger on December 4, 2011 at 10:16am

Of course they want her added to the mortgage. It gives them another responsible party to help pay the note. In most states the mortgage must follow the deed (anyone signing the deed should be on the mortgage). In PA, if a borrower adds someone to the deed without consent of the lender, there is verbiage in the mortgage that allows the lender to accelerate the note. The mortgage is just the recorded instrument attaching the note to the deed/property.  

Citi cannot force the wife into signing the mortgage, but they can accelerate the note and pursue foreclosure on the husband. In my experience, if your clients will qualify for the modification and truly want to keep the house, she will need to sign the mortgage. If there is any doubt about their ability to follow through on making the payments, she should not sign the mortgage. DISCLOSURE: I'm not an attorney, these are just my simple minded ramblings and experiences. Your clients should discuss this matter with a legal counsel regarding the laws pursuant to their case. 

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Permalink Reply by SE Davis on December 4, 2011 at 11:21am

I analyzed a similar permanent modification from Citi last month.

Prior to the LM the spouse was on the security deed but not on the note. Her income was necessary to gain approval.

In the Citi cover letter it was explained very clearly that with the spouse signing the modified note that DID NOT make her responsible for the debt.

I called Citi for verification and they confirmed that the spouse was not going to be responsible for the modified note because she was never on the original note and that they required her signature because it had to match the loan modification application and the fact that she was already on the security deed that could not be altered.

I completed an affadavit decribing the who, when and why of my telephone conversation with Citi and gave that to the homeowners for future reference if necessary.

That loan mod saves them about $700 per month and is pproximately a 35% reduction from their original PITI note.

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Permalink Reply by Jeffrey Burnham on December 4, 2011 at 12:53pm

A legal question ...short answer is NO, they cannot coerce her into adding to the mortgage. SHe MAY be liable if she is on the deed though if you are in a community property state though. Definately an attorney question!

Another consideration is that the husband may not have sufficient income to support the house payment on his own...so the wife MAY need to add her income for them to qualify. IS the house WORTH keeping if that's the case? Is it underwater? IF so, how much?

IF, he can't qualify...what are they going to do? Of course, the big option here is to short sale the house if a loan mod doesn't go thru.

 

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