Is there a grace period for a mortgage co-signer to retract his/her name off of the contract before being held responsible for the loan?

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Is there a grace period for a mortgage co-signer to retract his/her name off of the contract before being held responsible for the loan?

A husband and wife have separated and wife has filed for a divorce which is pending. The wife has decided to purchase a condo on her own credit ability but does not have a high enough income as a new teacher to qualify on her own. She has persuaded her husband to co-sign for her in that he is a young doctor with better credit. He has signed the contract last week but I don’t think it has gone to closing. He seems to be overwhelmed by his wife and broken hearted which has lead to this ill-advised decision to co-sign for the purchase of her condo with the mortgage lender. Is there any hope to remove his name off the contract short of refinancing the condo? I know he will be held responsible for the loan even if she should pass away.

Asked on March 29, 2019 under Real Estate Law, Florida

Answers:

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

Answered 2 years ago | Contributor

No such grace period exists. Once the co-signer puts their name on the loan, it is legallt effictive. There is no grace perod for this. Absent a refinance, the co-signer is liable until the loan is paid off in full. Further, the death of the other co-signer does not change this obligation.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

No, there is grace period for a co-signer to remove himself from the loan: once he signed, he is obligated so long as the loan exists. The only way to remove him would be for her to refinance the loan in her name only. Otherwise, as you note, he will be liable if she passes away--he'll also be liable if she simply stops paying, since the lender could then look to him to pay the loan.


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