How Do I Remove My Self as a Co-signer on a Mortgage?

UpdatedDec 23, 2009

Key Takeaways:

Contracts are designed to bind all parties.
You have three options to remove yourself as a cosigner.
Refinancing a mortgage is the best option to remove a cosigner.

I'm a co-signer with my ex-girlfriend on a mortgage. How do I remove myself from the mortgage?

Me and an ex-girlfriend purchased a home in 2000. In 2004 we split up. At that time, we refinanced and I received $45,000 to walk. My name was never on the deed, but only on the mortgage. I have not lived on the property or had any contact with her. Do I have any recourse to withdraw my name from the 2nd mortgage ? It is effecting my debt to income ratio on my credit report, leaving me unable to move forward with my life.

As a co-signer, you are guaranteeing payment in case the primary borrower defaults. The lender will report the account as a derogatory item on your credit reports if the primary borrower fails to pay. The lender will not remove you from the loan because your income, credit, and other factors were the basis for providing the loan and you signed loan documents that hold you liable in the event of a default.

Removing a Co-signer

There are three ways to have your name removed from the second mortgage. The first method is for her to refinance the mortgage to obtain an entirely new mortgage loan to pay off the existing second mortgage. The second method requires her to sell the home, assuming there will be sufficient proceeds from the sale, so that the second mortgage is paid off and you are no longer responsible for the loan. Finally, you can file for bankruptcy.

Risks of being a Co-signer

Because of the risks associated with being a cosignatory on a loan, lease, or other debt, I generally discourage the practice. I have seen far too many people who have cosigned loans for people whom they trusted end up in serious financial hardships when their friend or loved one failed to pay the debt as promised.

When considering cosigning for any debt, you should assume that you will be required to pay the debt yourself, and only agree to cosign if you know that you could pay the debt in full tomorrow without causing you or any financial hardship. If you do not have sufficient savings to pay off the debt for which you are cosigning, then it is probably imprudent for you to make such a potentially costly commitment. (See Will Co-signing On a Loan Hurt My Credit Score? for more about co-signing contracts.).

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

10 Comments

JJamie, Mar, 2012

I have a friend who co-signed for an ex-girlfriend's home equity loan, yet she is not listed as an owner or co-owner of the home. Needless to say they are no longer together and payments are not being made. Is there a way to get out of that loan? Her ex cannot make payments and is not willing to get a new loan or unable to get a new loan. I'm not sure how a loan was given when my friend was not listed as an owner of the house.

BBill, Mar, 2012

We discuss the three options for removing a co-signer's name from a mortgage in the original answer above: • Refinance • Sell the property • File for bankruptcy

There is one other option — claim the co-signer's signature was fraudulent. If the co-signer here cannot convince the occupant to refinance or sell the property, the co-signer has three options:

• Make the monthly payments, then file a lawsuit against the occupier to recover the payments. • Do nothing and expect collection activities to start in the future • File for bankruptcy

None of these choices are pleasant. Your story illustrates why Bills.com advises people to avoid co-signing loans if possible because no loan contains a "We broke up so the co-signer no longer has liability" clause.

The name on title fact you raised is a non-issue. There is no requirement a co-signer be listed on a title to a property.

SSamantha, Sep, 2011

My friend recently found out that she co-signed for a mortgage and she does not have any documentations pertaining to the mortgage. When she first came to the USA her older sister had her co-sign. She has to give her sister $600 every month for a room in which she shares with her niece (her sister's daughter). She is trying to apply for government low-income apartment in NYC; it wasn't until her interview she found out she owns a house. She pays cash and his afraid to give her check or money order because fair of being evicted. The question is, Can a new legal immigrant co-sign for a mortgage even though they have no established income or credit?

BBill, Sep, 2011

You answered your own question — yes. It makes no financial sense, but it appears that in this case a mortgage underwriter allowed a consumer with no income and no credit history to co-sign on a mortgage. My guess is this ridiculous event occurred before the mortgage crash, when underwriting standards were low. I doubt a mortgage underwriter would allow a person with no income history and no credit score to co-sign a mortgage loan today.

ggeorge, May, 2011

oki am also on the deed as well. if the house was Refinanced without my consent, will i still be on the deed as co owner? it has been less than a month and i cosigned for a house with me and my Girlfriend, now she saying she wants to break up with me can she throw me out? can i sue her for decetpion? her and her aunt put up the down payment, but her aunt is not on the mortgage and i helped pay for appriasal and inspections as well as some furnishings. i spent about 3 grand to help her get the house now that im broke she want to break up what are my options?

BBill, May, 2011

Consult with a lawyer who has experience litigating contract law. Why contract law? I would argue an oral or implied contract existed between you and the co-owner regarding the purchase of the house. It would be unfair and unreasonable for a person to befriend you, ask you help buy a house, and then unfriend you without reimbursing your for your costs. That would be an unjust enrichment.

The co-owner may have changed the mortgage, but that does not change the title, and the title is what determines the ownership of the property. Whatever you do, do not sign any documents your ex-friend places before you without your lawyer reading them first.

As I mentioned, consult with a lawyer. Yes, a lawyer's time is not cheap. However, you risk losing everything you put into the house if you do not have an advocate help you stand up for your rights.

ggeorge, May, 2011

can my girlfriend remove me as co signer from our home mortgage without my knowledge?

BBill, May, 2011

In my experience, the co-signer of a mortgage must sign documents I cannot recall for a refinance to occur. However, Bills.com has received several messages from readers where refinances occurred without the co-signer's knowledge or consent. Therefore, it is fair to say that refinances can occur in some states and in some circumstances without the co-signer's knowledge.

ssandra, Feb, 2011

what happens to my lease if i needed a co-signer to begin with and he withdraws himself

BBill, Feb, 2011

If the co-signer declines to sign the lease and a co-signer is required, then there is no contract between the landlord and the tenant. If the co-signer signed the lease, and then later decided he or she did not want to be a co-signer, then the co-signer has two options: 1. Encourage the other co-signer (in this case you) and the landlord to negotiate a new deal whereby the other co-signer is on the lease alone or with different co-signer. 2. File for bankruptcy, making sure to include the lease in the bankruptcy filing.

A lease is a contract, and contracts are designed to make it all but impossible for the co-signer to remove him or herself from the contract unilaterally.