Sometimes clients getting an uncontested Pennsylvania divorce, whether in Philadelphia, Pittsburgh, or another city, want to change the deed to their home. This can mean adding or removing a name or names. This should be addressed in a marital settlement agreement. Two questions often come to mind:
1. Who is responsible for making payments on the home if your name is on the deed but not the mortgage? The spouse who signed the mortgage is generally the one responsible for paying the mortgage. This can happen when one only spouse signs the note and mortgage, and both spouses sign the deed. If the mortgagee (the spouse who signed the note and mortgage) does not make payments as agreed, then the loan is in default, and the mortgage company (usually a bank) can foreclose and sell the property in order to get the money that is owed to them.
2 . Does it matter when my name was put on the deed? If your name was added to the deed after the mortgage and note was signed, then you and your spouse own the property, but usually only after the lender has been paid in full. The lender typically has a lien on the house, meaning that the spouse whose name is on the mortgage does not pay, then the bank can foreclose in order to get their money back. It will not matter if your name is on the deed, since it was added to the deed after the home was mortgaged. Be careful- If a spouse's name is added to or removed from the deed after the note and mortgage is signed by your spouse, it may trigger a "due on transfer" clause. If so, then the mortgage is payable in full upon demand of the mortgage company. You need to check with the mortgage company and review the contract that was signed when the loan was taken.
If your name is on the deed before your spouse signed the mortgage, then normally the bank can only foreclose on your spouse's share of the home. Generally, your name is on the deed to the home, then you you own an interest in it. The bank cannot foreclose since you did not transfer your interest to the bank. This means that you still own your share of the home. Most mortgage companies will not grant a mortgage to only one spouse if the deed is already in both names. The mortgage company will not want to deal with problems in getting their money back if your spouse defaults on the loan. The lender will most likely want all the owners sign the mortgage or they will not give the loan to any of the owners.
During the sub-prime lending frenzy, many mortgage companies wrote mortgages without having all the owners sign the mortgage. Therefore, lender does not have a full interest interest in the property. The lender would only have the interest of the person who signed the mortgage (your spouse).
You should always consult with the existing mortgage holder when making changes in the title to real estate, such as removing a name from a Pennsylvania deed to be sure that you fully understand the consequences of changing your deed. Different states may have different laws, so be sure to consult an attorney, as well.