Refinance a Mortgage You’re Not on

Refinance without being on mortgage

Refinance without being on mortgage.

Did you, or anyone you know have a family member/friend purchase a home for you because you had a short sale, foreclosure or bankruptcy?   There are countless “renters” out there today who did just that.  With the distressed sale market dust settled, those “renters” are now looking to fulfill their end of the deal with their “landlord” – aka “Uncle Bill.”  That means, put the house and mortgage into their name and freeing their “Uncle bill” from the situation now that their bankruptcy, foreclosure or short sale is out of sight and they qualify for their own mortgage.

Can You Refinance Home Loan Into Your Name?

Can you refinance a loan into your name if you are not on the loan AND no one from the current loan will be on the loan with you?  As of today for Fannie Mae backed Conventional home loans, the answer is YES (provided you meet all other Fannie Mae guidelines).   Before today, the answer was no which meant you actually had to purchase the home from Uncle Bill when it came time to put the loan in just your name.  Why?  It was due to something called “continuity of obligation.”  Simply put, in the past the continuity of obligation said that someone from the old loan being refinanced had to be on the new refinanced loan.  This meant, Uncle Bill AND you would need to refinance together.  Not the best solution since Uncle Bill’s goal is usually to get off the loan entirely.

As of today, Uncle Bill can be refinanced off the loan completely and you can refinance in just your name thanks to Fannie Mae omitting it’s continuity of obligation requirements.  Now, it is no longer required that someone from the old loan remain on the new loan in order to refinance.  Uncle Bill can come off the loan and you can refinance into just your name (as long as you qualify for the Fannie Mae Conventional Loan).

Timing Could Not be Better

As waves of former homeowners come out of the waiting periods for bankruptcy, short sale and foreclosure those that live in a home bought in a relatives name or friends name will have a simpler solution awaiting them.  Rather than buy, deal with down payments/gifts of equity and so on you can now neatly and cleanly refinance the loan into your name.  One cannot help but think this is part of the reason behind this change from Fannie Mae.  We love it when they get it right.

NOTE – this currently only applies to Fannie Mae backed Conventional financing

By Jeremy House

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Jeremy is the Founder of The HOUSE Team and a Sr. Loan Officer/Branch Manager with PrimeLending. Over the past several years he has ranked in the top 1% of all loan officers nationwide and one of the top 200 loan officers in America. In the mortgage industry, the devil is in the details. Jeremy prides himself on being a student and an expert when it comes to everything mortgage related.

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