We have received this question often and the real simple answer is Yes....and No...(mostly no.)
Is that clear enough? When banks lend money on a home they do so after the borrower(s) prove(s) (without a shadow of doubt these days) that they are willing, able and willing to make the payments for that loan. Lenders will ask for lots of documents to find the ability to pay, such as:
- Tax returns
- Bank statements
- Pay stubs
- Investment account statements
They also want to know the likelihood of that loan being paid back which is found by the credit report. A credit score is essentially the track record someone has to repay loan obligations. The ability to pay also takes into account the amount of the loan verse the amount of income that one makes. The standard (there are exceptions) is that a bank will want the mortgage payment to be about 25-33% of someone's monthly gross income. Gross income is defined by the total amount of income before taxes and withholding are taken out. Banks also look at the 
total amount of structured debt (structured debt is defined by any payments that have a regularly scheduled payment and these will typically show up on your credit report) and they'd like all structured debt (including the mortgage payment) to be less than around 45% of the gross income.
total amount of structured debt (structured debt is defined by any payments that have a regularly scheduled payment and these will typically show up on your credit report) and they'd like all structured debt (including the mortgage payment) to be less than around 45% of the gross income. After doing their due diligence and deciding whether or not someone is worthy of a loan they will issue that loan. That loan is based on the financial picture at that time and of the people that went through that process. When a loan is in two (or more) people's name the bank is counting on those people to fulfill their obligation and repay the loan according to the terms set forth. When a situation changes and those that are on the loan no longer want to be connected to each other by way of that property and wish to be removed from the loan a problem occurs. Since the bank is counting on all parties who got the loan to repay they have no interest in releasing anyone from liability since it's not in their best interest. If you find yourself on a loan that you no longer wish to be party to you have a couple options:
- You can sell the property: one way to get off of a loan is to get rid of that loan.
- You can refinance the property: another way is to have the property refinanced with either one of the original members or one of the original members plus another thus removing the 2nd party.
- You can try to fake your death - I cannot condone this although I believe it worked for D.B. Cooper (although I think even he was seen recently so it may not work forever).
It's rare to have only two solutions to a problem although that is the case here. Banks just aren't interested in releasing liabilities when they are in a better position and more likely to collect from two people than from one person. As with nearly everything there are some exceptions - Have you seen other situation where a bank has flexed their rules to allow people out of a mortgage obligation without selling or refinancing?
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