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Short Sale When Only One Spouse Is On The Loan
Sometimes loans were made with only one spouse on the loan. What happens to the non-borrower spouse when a house goes into foreclosure or sells at a short sale?
If someone is not on the loan a short sale should not impact their credit or ability to obtain future loans. This should be verified with an attorney and a mortgage broker.
First of all, how did it happen that only one spouse is on the loan? Possibilities include;
One spouse had better credit than the other and enough income to qualify for the loan. One spouse already owned the house and had a loan prior to getting married. Common questions I hear when helping divorcing spouses avoid foreclosure are;
Do the late payments impact the non-borrowing spouse’s credit? Does a foreclosure or short sale hurt the non-borrowing spouse’s ability to get a loan in the future? If the non-borrowing spouse did not personally guarantee the loan, the good payments and the bad payments will not show up on his or her credit report. Some signs iclude; when the non borrowing spouse calls the lender for information they refuse to talk to him (let’s assume the wife is on the loan and ... more
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