If my ex-husband obtains a novation on our mortgage, will the loan be removed from my credit report?

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If my ex-husband obtains a novation on our mortgage, will the loan be removed from my credit report?

Asked on July 7, 2011 under Real Estate Law, California

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

As I am sure that you know, mortgage novation is a legal process by which a person with a mortgage loan can transfer that loan to another person which releases the original loan holder from the liability of making the payments on the loan.  So presumably if the loan is satisfied as to you and your ex husband it should appear as such on your credit report.  But remember that in order for a mortgage novation to work all three parties in the transaction would need to come to an agreement (the current mortgagee, the new mortgagee, and the lender).  This does not happen often as lenders rarely approve of these substitutions, and instead prefer for the loan to be refinanced.  If they do approve a contract is created between the debtor and the third party called a deed of novation, agreement to novate.  I would talk to your lender and to an attorney here.  Good luck.


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