If a mortgage is in my husband’s name, but the deed shows the owner to be a LLC, who’s credit is damaged in a foreclosure?

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If a mortgage is in my husband’s name, but the deed shows the owner to be a LLC, who’s credit is damaged in a foreclosure?

I have a duplex that I am trying to do a short sale on. Bank wants me to deed the title from the LLC back to my husband’s name, or they will not complete the short sale. I don’t want to deed it back but if I don’t they will foreclose. I am the single sole owner of the LLC. If I choose to let it foreclose instead, will the LLC be liable or my husband because he is the one who took out the loan?

Asked on May 26, 2011 under Real Estate Law, California

Answers:

Mitchell Sussman / Mitchell Reed Sussman & Associates

Answered 9 years ago | Contributor

The credit of the borrower is negatively impacted by a foreclosure. If your husband is the named borrower on the loan it is his credit that will be negatively impacted.

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

A credit check will show a foreclosure on the mortgagor's report (i.e. the borrower) not the owner's. Consequently, whether or not the property is titled in the name of an LLC will not matter here. Since your husband is the one who took out the loan a negative notation will be placed in his report. And a foreclosure is one of the worse things to have so noted. Try your best to work things out with the lender. Best of luck.


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