If a home goes into foreclosure, what happens to a co-signer?
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If a home goes into foreclosure, what happens to a co-signer?
I am a co-signer on my daughter’s mortgage. She is is allowing the home to go into foreclosure. Can the mortgage company put a lien on my home? What else could they do to me?
Asked on October 19, 2010 under Real Estate Law, Michigan
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
1) If the home is foreclosed, you will lose any right to it or to the equity in it.
2) As a cosignor, you are legally as responsible for the payments as your daughter. If the sale of the home brings in less than the remaining principal balance on the loan, the lender may sue you for that balance. If they sue you and win, they could then try to collect by using several different mechanisms, one of which is to get a court order to put a lien on your home; or garnish wages; or garnish a bank account.
If your daughter is going to default, she should consider bankruptcy. You might also want to consider making the payments on her behalf and having her sell or transfer her interest to you. You should speak with an attorney to evaluate your options. Good luck.
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