the bank
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the bank (by Russ Miller [IL]) Nov 26, 2013 8:48 PM
       the bank (by Lois [CA]) Nov 26, 2013 9:34 PM
       the bank (by gevans [SC]) Nov 27, 2013 4:21 AM
       the bank (by S i d [MO]) Nov 27, 2013 4:56 AM
       the bank (by S i d [MO]) Nov 27, 2013 5:15 AM
       the bank (by Pattyk [MO]) Nov 27, 2013 6:06 AM
       the bank (by Russ Miller [IL]) Nov 27, 2013 7:45 AM
       the bank (by John... [MI]) Nov 27, 2013 7:51 AM
       the bank (by Nicole [PA]) Nov 27, 2013 8:00 AM
       the bank (by BillS [CO]) Nov 27, 2013 8:14 AM
       the bank (by RUSS MILLER [IL]) Nov 27, 2013 8:24 AM
       the bank (by pattyk [MO]) Nov 27, 2013 10:30 AM
       the bank (by Russ Miller [IL]) Nov 27, 2013 10:56 AM
       the bank (by S i d [MO]) Nov 27, 2013 11:21 AM
       the bank (by Mike45 [NV]) Nov 27, 2013 12:08 PM
       the bank (by Ken [NY]) Nov 27, 2013 12:54 PM
       the bank (by Russ Miller [IL]) Nov 27, 2013 1:39 PM
       the bank (by Barb [MO]) Nov 27, 2013 2:32 PM
       the bank (by Nancy [IN]) Nov 27, 2013 4:59 PM

the bank (by Russ Miller [IL]) Posted on: Nov 26, 2013 8:48 PM

I'm divorcing (amicably, thank god) and the wife is signing over the house (quitclaim deed) and I've decided to rent the place to my daughter's family and move out. Is there any law that requires that I tell the bank that I'm no longer living there and that I have tenants? I know to check the wording of my lease for anything like that, but i'm wondering if Illinois requires any disclosure to the bank. Thank you!

the bank (by Lois [CA]) Posted on: Nov 26, 2013 9:34 PM

Check your mortgage docs to see. You bought as 'owner occupied' so they could probably call the loan if they were so inclined.

Others will chime in here, I'm sure, and will tell you DO NOT rent to family or friends. Search the archives and you'll find out the pitfalls of doing that.

the bank (by gevans [SC]) Posted on: Nov 27, 2013 4:21 AM

If you have lived there at least a year, the bank will not do anything.

However, your insurance should change from owner occupied to rental type. If you don't make this change and the house burns down, the insurance may not pay. --141.129.x.xx

the bank (by S i d [MO]) Posted on: Nov 27, 2013 4:56 AM

So your wife is quit claming the house to you, but you have a mortgage. Are you going to refinance it? I'm thinking the answer is "No" since you're worried about the current bank...

So what happens to your ex-wife if you fail to pay the mortgage? If her attorney has 2 cents of common sense, he will insist that you either sell the house or refinance it in your own name and make her no longer liable for the payment. It's a common--STUPID--mistake a lot of divorcees make: they give up all ownership rights to the property but fail to get their name off the loan. 5 years later and 6 months of non-payments and BOOM...

Just saying, we don't have crystal balls. If your attempts at land lording go bad or for whatever reason you cannot make the payments, she's still on the hook, will have her credit trashed, and could get sued for the deficiency if the loan goes into default. That could have a negative impact on your "amicable" relationship with her in the future.

If you're dividing your married lives, you need a clean break. If it were me, I'd refinance the house in my name only or sell it.

the bank (by S i d [MO]) Posted on: Nov 27, 2013 5:15 AM

Btw, Russ, please understand I'm not bashing on you or your soon-to-be ex-wife. I'm adding this caveat because I may have jumped the gun and assumed you were both on the mortgage note. If she's on the note, I'm at odds with whoever gave her the advice to just quit claim without also demanding to be taken off the note via selling or refinancing.

Maybe you owned the home prior to marriage, or perhaps you worked out a deal where only you signed the note. If that's the case, I'll shaddup and with you both the best!

But if she's on the note and you value the future relationship with your soon-to-be Ex (and it sounds like you do), I recommend you relieve her of the burden of paying for this house. Even if you pay faithfully, it's still going to show up on her credit report and will affect her ability to qualify for a mortgage later.

Good luck, I hope it turns out well.

the bank (by Pattyk [MO]) Posted on: Nov 27, 2013 6:06 AM

hopefully the house is paid off.

yes you can rent to your daughter, however renting to relatives come with a lot of unforeseen issues. The biggest one belongs to you, would you be prepared to ask them to leave and if they did not consider how you would feel if you had to evict daughter/grandkids/husband? if you had to. Just think about if you could keep business and family separated. some people can and some people don't think their family would ever do them wrong. Huge.

the bank (by Russ Miller [IL]) Posted on: Nov 27, 2013 7:45 AM

Thanks for all the great and quick feedback!

I have never been a landlord before, but I am learning a lot while browsing this forum - what a great find!

I have a quote from my insurance for a landlord-plan.

We did buy the place together, so I'm sure that both our names are on the deed and title. I will likely have to refi.

I have discussed the plans with my daughter's family, detailing that this will all be above-board, a thorough lease will be written which will include options for terminating or evicting.

I appreciate all the feedback, I will spend a lot of time on this forum and hopefully soon be a contributor!

Thanks again!

the bank (by John... [MI]) Posted on: Nov 27, 2013 7:51 AM

I agree with Patty. To me, the biggest mistake in this whole situation isn't dealing with the bank -- it's renting to family. Almost always a bad idea.

- John...

the bank (by Nicole [PA]) Posted on: Nov 27, 2013 8:00 AM

Russ - as a personal thought, as someone above already said, you should get back to your lawyers and find out why your exwife wasn't removed from the loan ... her lawyer isn't the sharpest tack if he permitted her to sign over a Deed but not get off the Mortgage.

As to the others who say don't rent to family, I do now, have in the past, and will continue to do so in the future. Would I rent to every family member? Absolutely not. You need to know your family and the dynamics of it ... I've had NO family issues, ever, regarding them being tenants. --72.95.xx.xx

the bank (by BillS [CO]) Posted on: Nov 27, 2013 8:14 AM

If you have to refi and it's a rental. All the rules change. Interest rates are higher. Debt to income ratios change and equity requirement change. If you are going to refi at any point in the future you should do it now while you live there. Know that what you could afford as a couple you won't be able to as an individual.

Absolutely do not rent to your family. If everything goes well no problem. If things go bad, it'll make your divorce seem like a walk in the park. Is it worth the risk?

Why not just sell the house and take the money?

the bank (by RUSS MILLER [IL]) Posted on: Nov 27, 2013 8:24 AM

I've been trying to short-sell, 40+ showings and no offers, probably because of all the forclosures in the neighboorhood. I am about break-even, but I have a $20k HE loan.

The divorce is in the early stages, but I will make sure that her name is off the deed and title. I can see that that is important.

Thanks again!

the bank (by pattyk [MO]) Posted on: Nov 27, 2013 10:30 AM

the rule in divorce is who ever gets the house (loan included) looses... so i'd just like to get that out there. You'd be better off with a clean sale.

Also, your insurance should have went down, way down, from Single Family home to LL policy. If that didn't happened then pay attention to the red flags.

the bank (by Russ Miller [IL]) Posted on: Nov 27, 2013 10:56 AM

Patty - Yes my insurance quote went down. What do you mean about loses? Loses what? Please elaborate. Thanks!

the bank (by S i d [MO]) Posted on: Nov 27, 2013 11:21 AM


Good thing you are trying to take the right steps. I want to be sure though that you're using the correct terminology because even tiny misunderstandings in legal proceeding sometimes cost big $$$.

Several of us have advised you to get your wife off the loan, and your response is that you will "get her off the DEED and TITLE"...those are the same thing! You need her off the LOAN (aka Promissory Note). If you go asking someone to help "get her off the DEED and TITLE" they'll say, "no need, she signed a quit claim." Then you'll be back where you are today. This could be a terrible and expensive misunderstanding.

And if you care for her, kindly suggest she get a new lawyer. Her lawyer is a dunce unless she lied/misinformed him about whether or not she was a co-signor on any notes with you. He should have asked her point blank, "Do you and your husband have an loans with both your names on them? Yes? Ok, then we need to force a sale of the assets or make him refinance them on his own." Basic divorce 101 type stuff. I've never been divorced, but I know enough people who have and a few of them forget or don't understand that they MUST do this.

So, to emphasize one last time: Ex-wife needs to get off the LOAN, which means you have only two options: refinance or sell. Unless the bank is dumber than your ex-wife's lawyer and they just resign the papers with you as the only borrower and permit her to walk away. I suppose it could happen....theoretically... snowball's chance in HECK.... sincerely doubt it.

If you refinance, the bank will not give you owner-occupied interest rates and won't to lend more than 75-80% LTV. If you're at break-even, it's doubtful you can refinance it as an investment property. You DO need to tell any potential lender doing a refi whether or not you intend to owner-occupy the house, and if you don't and they find out it can get you in trouble. If you plan on living there for at least a year or so, you might be able to refinance under HARP.

Otherwise, realistically, you only have one choice: sell it. Write a check if you have to, but be done with this episode of your life and get ready to move on. That's what I'd do if I were in your shoes. Not telling you how to live your life, just pointing out the pitfalls to this scenario and how to avoid them. As GI Joe used to say, "Knowing is half the battle."

Happy Thanksgiving!

the bank (by Mike45 [NV]) Posted on: Nov 27, 2013 12:08 PM

Sid, if Mrs. Russ’ attorney failed to properly protect her, that is not Russ’ fault or problem.

Most of the time, there is little that Mrs. Russ or her attorney can do about the situation. If the house is upside down (Russ said he tried to short-sell it), Russ cannot refinance to remove Mrs. Russ from the mortgage. Even if the house is not upside down, a pre-payment penalty might make it onerous for Russ to re-finance. And, for much of my career, interest rates made it prohibitive for the person taking over the house to re-finance – remember the days of double-digit interest rates?

The bank would not usually release the out-spouse from the loan obligation. Even if the loan is “non-recourse.” Why would they?

I have had many divorces where we could NOT get the out-spouse off the mortgage. You have play the hand you are dealt. Mrs. Russ’ attorney is probably not a dunce, but probably has no way to protect his client from this particular risk. Letting Russ have the house is probably better for her than leaving the house in both their names.

the bank (by Ken [NY]) Posted on: Nov 27, 2013 12:54 PM

It is not your job to inform your x wife of how she should handle being removed from ownership but she is still on the mortgage,if you do try to teach her this it will just cause you a headache and you will wish you kept your mouth shut,this is what she hired an attorney for.I would accomplish my goals and if you did not understand where she stands it is not my problem

the bank (by Russ Miller [IL]) Posted on: Nov 27, 2013 1:39 PM

Yes, I do see that getting her off the LOAN is also important. I'm anticipating that I will not be able to keep this from the bank, and will have to refi, which answers my original question. Thank you all for the excellent discussion.

the bank (by Barb [MO]) Posted on: Nov 27, 2013 2:32 PM

I have a friend who went through this years ago. Wife got the house, he signed the quit-claim, and she was supposed to re-fi. Well, the bank refused to loan her the money by herself, as she did not have the income under their rules, but he had already signed the quit-claim. Many years later, she finally quit paying the note, and the bank came after him for the balance, even they had been divorced and he had signed the quit-claim years before. It cost him about $10K. He was lucky, the bank didn't screw his credit over even though they could have.

I recommend you go try to re-fi it now, under just your own name, getting your wife off it now. Then, live there by yourself for a year or two and hope the value goes back up. Otherwise, will your daughter and her family buy it for what you owe?

the bank (by Nancy [IN]) Posted on: Nov 27, 2013 4:59 PM

NEVER, NEVER, NEVER rent to friends or family. There will be problems and misunderstandings that will affect your relationship. Not a good move.

Doesn't sound like you will be able to refi if you are trying to short sell the house, and this leaves your wife vulnerable, still being liable for the mortgage but needing to move somewhere (I'm assuming) and have enough income to do so.

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