This post is actually targeted at a non-member of the ActiveRain community. However, EVERYONE might be able to benefit from this information.
This anonymous individual left the following comment on my When Co-Signing a Mortgage Goes Wrong II post...
"My father in law told us that he co-signed a mortgage for a friend. We are now suspecting that the friend is in default on their payments. What happens to and who is responsible for that mortgage when my father in law passes away. Does his estate, which will go to his two sons, become responsible for that mortgage?"
I spoke with my personal real estate attorney Mark Thomas with Thomas Law Firm, LLC.
(SIDE NOTE: If you aren't closing your Columbia, Lexington or Irmo real estate transactions with Mark, you might as well go to Vegas and roll dice on the crap table!)
Mark sent me the following response......
"...most people confuse note and mortgage - here is my best answer
for each:
1) If he co-signed, he is responsible for payment of the loan, and any
default will harm his credit, and could be a claim on the estate.
2) signed the mortgage - means he is a co-owner of the home, and will be
listed in the foreclosure action by the bank. If he did not sign the note,
his involvement ends there..."
When someone obtains financing to purchase a home, the home buyer will sign two sets of documentation. Let me make clear the difference between two documents.
In simplest terms, a borrower signs a promissory NOTE which promises to repay the borrowed money. A borrower signs a MORTGAGE to pledge the purchased home as collateral. Hence, when the note is not been paid according to the terms of a particular agreement, the MORTGAGE is used to foreclosure the property.
Hence, ALL SIGNERS of the NOTE are responsible for REPAYMENT!
ATTENTION ANONYMOUS COMMENTER.......Mark Thomas and I do not represent you or your Father-in-Law. Therefore, the opinions expressed are solely from a "generally speaking" perspective. Mark and I do not know the full extent of your Father-in-Law situation. Hence, we can't (nor are we attempting) to give you real estate or legal advice. However, we are encouraging your father-in-law to seek Legal Counsel!
Hopefully, this post will make someone think twice about co-signing any binding document.
Happy Holidays!
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