Q: Is a person who now owns a mortgaged home via JTWROS now exposed to a lawsuit by the lender if unable to pay payments?
Scenario: In Florida, Person A secures a mortgage and purchases a home and some time later adds Person B as a Joint Tenant w/ Right of Survivorship. Five years into a thirty year mortgage, Person A dies. As the ownership of the property transfers over to Person B, they are unable to cover the monthly mortgage payments. Is Person B exposed to potentially being sued by the lender for being unable to assume the mortgage that is attached to the property? I would assume that the house would be foreclosed on and then forced into a sale to pay off the mortgage. Would that foreclosure land on Person B's credit? Would the judgement be recorded as being against Person B specifically? I'm asking these questions to better understand the repercussions of JTWROS and the potential negative impact on credit. Thanks!
A: Yes the person added to the deed would be named as a Defendant since they have an interest in the property being foreclosed. They would not however be responsible for paying any part of the mortgage obligation since they did not agree to the same. As a general rule this would also affect person B's credit since a defendant in a foreclosure action is normally someone that is legally obligated to pay the mortgage. Person B would be able to require the credit reporting agency to post the explanation that person B is not the debtor person B only had an interest in the property being foreclosed. Other defendants might be others with liens against the property or other judgment creditors.
If person B wants to retain the property person B should see a competent mortgage broker about refinancing. Mortgage lenders normally do not do assumptions of mortgages and if they do the requirements are the same as applying for new financing.
If person B does not want to retain the property you should consult with a real estate attorney in your area as to other methods of turning over the property to the mortgage lender that may be possible if there are not other liens on the property.
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