How To Remove A Co-signer From A Mortgage - YouTube

hi I'm David Soble and I'm a real estate and finance attorney here in Michigan

this week's question comes from James and Grosse Pointe Michigan who writes I

co-signed on a commercial loan for a business that is owned by both my

daughter and my son-in-law back in 2010 now they're getting a divorce so no one

he says has paid on the loan since they filed for their divorce James goes on to

say that the bank just called me for the payment and also sent me a letter

demanding that I pay off the loan in full it's kind of tough anyway so what

what he goes on to say is that his daughter tells him not to worry because

the court has ordered that her soon-to-be ex which would be James

son-in-law would be responsible to pay the bank not her so James asked David

I'm worried we're sure he says it and then he says I he says I have my own

bills to pay and then he asked what do I do

once the court finds my soon-to-be ex-son-in-law solely responsible for the

business loan can I be released from the loan by the bank it's a great question

James unfortunately my answer you're not gonna

like but having been an attorney with the banks for close to 25 years it's

really not likely James you see with the banks a cosigner is really a person who

takes full responsibility to pay back a loan in the event that there's a

borrower or a maker who fails to make their payment under the loan and so

often a cosigner is going to be a family member it could be a friend it could be

a business partner but the cosigner is obligated to pay any missed payments and

even the full amount of the loan if the borrower doesn't pay and doesn't meet

their obligations so another name for a cosigner is a guarantee a part of me a

guarantor and the contract is known as a guarantee

so the guarantor or cosigner is guaranteeing the payment back to the

bank and banks rarely if ever released co-signers from their obligation until

the underlying loan in its entirety is paid in full

or in certain circumstances when the lender receives a substantial pay down

on that loan to reduce the bank's perceived exposure and so just because

James the court says you know that your son-in-law is gonna have to be paying on

the lawn loan under the divorce decree it does not really release you of your

contingent obligations to the mortgage company you know in certain legal

circles co-signers are known as you know excuse me for saying this but idiots

with pens and it may sound harsh and it actually really is but being being a

cosigner for a third party rarely if ever has any upside to it in some cases

however it may be necessary so for instance when you're a business owner

and you're taking out a loan for your business the bank is going to require

and ask that the individual business owners sign on the loan personally and

essentially then they're guaranteeing the loan on behalf their company in your

case James it sounds as if the bank felt that your daughter and your soon-to-be

ex-son-in-law we're really not financially strong enough on their own

to take out the loan and so the bank really wanted a little bit more strength

to the loan and they asked for you as a guarantor what I would do all hope is

not lost I would definitely take your loan contract to a finance attorney like

myself there's quite a few out there but take it to an attorney to have them

review it obligations under a guarantee are usually very solid terms but you

should know all of your rights that you have against the bank as well as against

your daughter and your son-in-law you know I hope you found this answer

helpful James and if you the viewers have found this answer helpful and if

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submit those questions or your comments you can also email us at pardon me at

team at proven resource. com so that's team

at proven resource com and if you need any further information please feel free

to contact me David Soble at triple-eight seven eight

nine one seven one five or you can reach me a provenresource.com once again

thanks for watching and take care