Refinance a Mortgage You’re Not on

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Did a family member or friend purchase a home in their name for you because of a prior short sale, foreclosure or bankruptcy on your credit?   Well, there are countless people out there today who did just that.  With the Real Estate bubble behind us, refinancing the home over into your name is easier than ever.

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Refinance Home Loan Your Not on Into Your Name

So many people are trying to transfer the house family bought “for them” into their own name.  Since their bankruptcy, foreclosure or short sale is old enough, they are eligible for their own mortgage now. 2 Question loom large for those in this position:

  1. Can you even refinance a loan into your name if you are not on the current loan?
  2. What if no one from the current loan will be on the refinanced loan with you?

For Fannie Mae backed Conventional home loans, the answer is YES you can.  Not too long ago, you had to buy the home from whoever bought it for you to put the mortgage in your own name.  Either that or refinance along with at least one person that was on the original loan.  Why the sudden change to “yes you can?” It is all thanks to the elimination of something called “Continuity of Obligation.”

Elimination of Continuity of Obligation

Prior to this wonderful change, continuity of obligation meant the new refinanced loan must have at least one borrower from the original loan still on it.  This meant, Uncle Bill AND you needed to refinance together.  Not and ideal solution.  After-all, your family members goal was to get off the loan at the earliest possible opportunity.  Likewise, your goal was to get the mortgage in your name as soon as possible.

As of today, you can refinance a loan into just your name even though you’re not on the current loan.  All thanks to Fannie Mae omitting the Continuity of Obligation rule.  To recap, no one from the initial loan needs to be on the new refinanced loan.

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Timing Could Not be Better

The waves of “renters” completing their sentences for a bankruptcy, short sale or foreclosure have a simpler solution to take over the mortgage.  Rather than buy, deal with down payments or gifts of equity you can just 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.

By Jeremy House

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