My ex-wife was the primary borrower on a home loan with me as co-borrower. After our divorce was finalized she filed for bankruptcy and the loan was discharged. However, I remained in the home and continue to pay the mortgage, property tax, insurance, etc. which the lender not only allowed but encouraged. The ex-wife signed a quit claim deed recently and the deed to the property is now in my name only. Provided there is equity in the home when it's sold, does any profit go to me, the deed holder? If not, what benefit is there, if any, to hold the deed to the property?
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Do you mean there was a mortgage, and then another loan on top of that?– AcccumulationMay 10, 2018 at 20:18
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No. This is specifically regarding the primary mortgage loan. There are no other loans attached to the property.– Jim RothMay 10, 2018 at 20:49
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2If the loan was discharged, why were you paying the mortgage?– AcccumulationOct 9, 2018 at 3:18
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This seems unusual. My understanding is that secured loans (like a mortgage) are either reaffirmed in a bankruptcy, or else the property is sold and the proceeds used against the balance, depending on equity, debt, and cash flow. A mortgage would not ordinarily be "discharged". She may have been removed from the loan (but not the deed) or the mortgage company may not have cared since there was a responsible payer and the loan was not in default. The terms of the divorce may also figure here, depending on who was awarded the house (or fraction thereof).– IstanariNov 8, 2018 at 14:27
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2 Answers
The bank is only entitled to the balance of the outstanding loan, even if its discharged in bankruptcy. The balance would go to the property deed holder - you.
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The only way they would be entitled to the equity as well, would be if they foreclosed on the loan - then they become the deed holder.– NormMay 11, 2018 at 17:12
I would not accept a quit claim deed for your wife. Why didn't you get a General Warranty Deed? This could be an issue, should you sell the home, for the new buyers to get title insurance. Title Insurance company's hate Quit Claim Deeds.
As far as ay proceeds, they will go to the owner. But your ex-wife will have most likely have to sign the closing documents since her name is on the mortgage. Title companys will typically do this to cover their butts.