Midland, MI asked in Consumer Law, Divorce and Real Estate Law for Michigan

Q: Ex wife did not refinance loan for house from divorce and mortgage just increased $10,000 w/o my sig. Is this legal

Ex-wife won the house and all debt associated in the divorce but there wasn't a timeline to refinance written in the agreement. I know she has been able to defer payments/remodify without my signature but this last Jan/Feb the loan balance increased by $10,000 and she bought a brand new camper. As the co-applicant is she able to renegotiate a loan and increase the amount owed without the main applicants signature? I have requested to be removed from the loan several times and have been told no by the mortgage company. This was a conventional mortgage when it was originated. I have not signed any mortgage documents since loan origination or for any remodifications. My name was quitclaimed off the deed in 2000. It is still showing as money owed by me and is keeping me from refinancing my current home. We are in the process of reviewing if she used my signature illegally. If she did not, is there anyway I can go after the mortgage company for allowing this?

2 Lawyer Answers
Trent Harris
Trent Harris
Answered
  • Jackson, MI
  • Licensed in Michigan

A: The divorce decree is binding between you and your ex-spouse, and isn’t binding on the mortgage company. So they have the right to continue reporting the loan as yours, until it’s paid in full. That’s the first part.

But the second part is whether the loan documents you signed permitted future advances under the mortgage. You say that the loan was a conventional loan. If so, then future advances seem unlikely under the loan documents.

Without seeing the documents you signed, and assuming that your loan was NOT a future advance mortgage, I would say no, a lender cannot unilaterally increase the amount of a loan without all applicants’ consent. Nor would a lender be able to convert a conventional 30-year loan to a future advance mortgage with the consent of only one of two co-debtors. The lender is bound by the contract you signed, the same as you are bound.

If the lender is reporting the increased balance as your obligation to pay, then that could be (1) a breach of the lender’s contract with you, and/or (2) a violation of the fair credit reporting act. If #1, you might have a breach of co tract suit. If #2 and you wish to pursue the FCRA angle, you will need to keep documentation of loans you have applied for, and been denied, or been offered terms that were unfavorable to you because of the potentially false information appearing on your credit report.

On the other hand, if you are still obligated on the loan, then the lender should have to give you information about the loan, including any recent transactions. It’s your loan, and it’s your business to know how the balance got where it is. I would start with the lender and asking them what happened, including a request for documentation before forming any conclusions.

There are ways you can get yourself off the loan. One might be to negotiate a settlement with the lender for them to release you from liability on the loan. You could pay money, or if your claims above have merit, you could offer to release the bank from liability from your potential claims in exchange for being released from the loan. Another way to be released from personal liability on a loan is bankruptcy. What’s right for you? Only you and a lawyer working together can say.

As always, you get what you pay for. Be sure to talk to a qualified attorney about your specific situation before choosing to rely on information you get from internet discussion boards such as this one.

David Soble
David Soble
PREMIUM
Answered
  • Farmington Hills, MI
  • Licensed in Michigan

A: You should not be held responsible for the additional monies that your wife took from the mortgage company after the divorce decree was entered. It is most likely that you will be held responsible for the debt prior to the new advances.

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