Map a home equity transition

A divorce decree or property settlement may assign a debt between former spouses, but it does not change the fact that a creditor may collect from anyone whose name remains on the loan.

Removing a person’s name from a home title does not, by itself, remove that person’s name or responsibility from the mortgage.

The CFPB identifies contractual release by the creditor or a refinance that removes the person’s name as examples of ways responsibility for a jointly owed loan may change, while noting that state law varies.

A transfer of ownership and a release of liability are separate concepts in Fannie Mae’s servicing procedures: Fannie Mae states that an exempt transferee generally need not assume the mortgage unless a release of liability is requested or a mortgage-loan modification is involved.

Under Regulation X, a “confirmed successor in interest” is a successor whose identity and ownership interest in property securing a covered mortgage loan have been confirmed by the servicer.

After learning of a potential successor, a servicer must promptly determine the documents it reasonably requires to confirm the person’s identity and ownership interest and provide a description of those documents and instructions for a written information request.

After receiving the identified documents, the servicer must promptly determine whether the person is confirmed, needs additional documents, or is not a successor in interest, and promptly notify the person of that determination.

Treatment as a borrower for these servicing protections does not decide whether the successor is contractually liable on the mortgage; that question is determined by applicable state law.

The due-on-sale exemptions address exercise of the due-on-sale option; the text does not state that an exemption cancels the mortgage debt, releases a borrower, or removes the lender’s lien.

CFPB explains that a loan assumption can apply when a person receives title to a mortgaged property after a death or divorce.

New Jersey’s official divorce instructions state that a Family Part Case Information Statement must be filed by both parties when custody, support, alimony, or equitable distribution is in dispute.

New Jersey’s official Case Information Statement form requests financial details, income, expenses, assets, liabilities, property title information, and supporting records in the circumstances where the form is required.

Bring the official Case Information Statement and this worksheet to a New Jersey matrimonial attorney and ask which court-requested financial details, supporting records, valuations, and certifications the official form requires beyond this planning record.

Bring the signed decree or settlement, promissory note, mortgage or deed of trust, and current statement to a matrimonial attorney, then ask which obligations the court order allocates between former spouses and which contractual obligations remain with the creditor.

Bring the servicer’s confirmation notice, ownership instrument, and note to an estate or matrimonial attorney, and ask what servicing rights the confirmation supplies and whether any separate document creates or releases contractual liability.

Bring the note, security instrument, transfer document, and servicer correspondence to the mortgage servicer and a licensed attorney, and ask whether the transfer fits a federal exemption and whether any separate assumption or release agreement exists.

CFPB’s official interpretations identify a death certificate, executed will, or court order as examples of documents that may be reasonable, but state that the examples vary with the jurisdiction and situation.

New Jersey Courts identifies the county surrogate as the elected constitutional officer who serves as judge of the Surrogate’s Court for uncontested probate and estate matters.

New York Courts states that property owned jointly with a right of survivorship or as tenants by the entirety passes directly to the surviving owner and is not a probate asset.

Fannie Mae requires evidence of the payment amount and terms through a divorce decree, separation agreement, other written legal agreement, court decree, or documentation of applicable state law that mandates the payments.