Dangers of Co-Signing a Florida Home Loan

It’s one thing to owe money on your Florida home loan. That’s just how the market works. But what about those who co-sign a mortgage and actually end up owing thousands on someone else’s Florida home loan? Bob Bruss, a real estate expert, responds to such a dilemma below:

DEAR BOB: About five years ago, I co-signed a home mortgage for my niece so she could buy a condominium. All went well until about four months ago. She lost her job and refuses to take another job that doesn’t pay as much. The result is she is now four months behind on her mortgage payments. Frankly, there is no way she can catch up, even if she does find her perfect “pie in the sky” job.

However, I have a 723 FICO score, which I don’t want to lose because good credit is important to me. Other than paying the missing mortgage payments, which now are about $14,000, how can I protect my good credit?

DEAR FRED: You can’t. You probably now realize it was a major mistake to co-sign on your niece’s mortgage. I’m sure you wanted to help her and you trusted her to make the monthly payments. But when she defaulted, it not only hurt her credit rating but it also hurt yours as a co-signer.

Your situation is a classic example why not to co-sign on a mortgage obligation.

Legally, you are liable for the missing mortgage payments. However, if there is sufficient equity in the condominium, the lender will probably foreclose and either be paid in full by a bidder at the foreclosure auction or receive title to resell the condo.

FHL note: There’s also a chance this individiual could be sued for losses, so consulting with a real estate attorney is probably a good idea. In general, it’s rarely a good idea to co-sign a Florida home mortgage loan, even for a close family member or friend.