Quit Claims and Foreclosure

[universalfool]

My question involves real estate located in the State of GA. My husband and I have two houses. (We were separated for about 4 years, but have gotten back together.) Due to the current economy, we are probably going to have to let one of the houses go. I am not on either mortgage, only my husband is on both mortgages, but we are both on title to both homes. If he did a quit claim for his interest in the house we would like to keep to me, would that prevent the mortgage company for the house we would need to let go from attaching to the house we would like to keep, as he would have no ownership in the house (but would still be the only one on the mortgage)?

We are trying to think of a way to avoid filing bankruptcy to prevent the mortgage company from going after this house, too. We really don't want to file bankruptcy, but cannot afford the 2nd house any longer, and real estate prices have fallen to the point that we owe more than the house in question is worth, so we cannot sell it. Thanks for any advice or suggestions.

[LawResearcherMissy]

A quitclaim is not going to release your husband from his responsibility to pay the mortgage.

Have you considered renting one of the houses out until the market improves?

One of our contributors here was in a situation similar to yours (two houses, upside down on one) and did just that to avoid financial disaster.

[SSNegotiator]

Missy is right, the mortgage is secured by the property. Renting the property is a good option but if you have fallen behind or you are facing the possibility of falling behind on your payments then you may be able to negotiate a short sale on your home. You should first have it listed with a Real Estate Agent and see if you can sell it out right. If that fails then you may have to negotiate a short sale with your lender. A short sale is when your lender agrees to accept a payoff of less than what is owed on the mortgage. You will not make any money but in most cases you will no longer owe any money either. The only way you would need to file bankruptcy is if you allow the home to be foreclosed on. If you short sell the home or deed in-lieu of foreclosure, lenders usually agree to waive their right to seek any deficiency judgment. Which means you are not held responsible for any difference in the amount of what is owed on your mortgage and the amount the home sells for. You may however have to pay taxes on the deficiency amount since uncle sam considers debt as income, unless you can prove insolvency. I reccommend you consult an accountant for that.