My husband owns a property here in California and his name alone is currently on the loan and title of it. We are married now, and since I’m his wife, can I refinance the property into my name only so he can free up his credit to participate in other investment opportunities?

Unfortunately, unless you meet what’s called the continuity of obligation rule, then you are likely not be able to complete a refinance in your name alone. By standard Fannie Mae definition, a continuity of obligation occurs on a refinance transaction when at least one of the borrowers on the existing mortgage is also a borrower on the new refinance transaction secured by the subject property.

Basically, if you aren’t presently on the loan, you would have to be on title for 12 months if it is an owner-occupied loan or 24 months for an investment property refinance to maximize the allowable guidelines.

However, there are a few permissible exceptions. It could work if you were to be added to the title of the home 24 months or more prior to the closing date of the new refinance transaction. Alternatively, if your lender could document you acquired the property through an inheritance or if it was legally awarded to you through let’s say a divorce or separation or dissolution of a domestic partnership, then there would be no minimum waiting period with regard to how long you must be on the title of the home before refinancing it into your name only.

Additionally, you might be able to pull this off if you were added to the title of your husband’s home through a transfer from a trust or a limited liability company (LLC) or partnership. Although, you must have been a beneficiary or a 25 percent or more owner of the LLC or partnership prior to the transfer and the transferring entity and/or the borrower needs to prove a consecutive ownership on title for at least the most recent six months prior to the closing of the refinance loan. It’s important to note that a simple direct transfer of ownership from a corporation to an individual does not meet the continuity of obligation requirement.

Freddie Mac has a slightly different twist. For example, at least one borrower on the refinance loan must have been a borrower on the loan being refinanced. Or at least one borrower on the new refinance mortgage held title to and resided in the property as their primary residence for the most recent 12-month period. If that’s the case, then you’ll need to also provide evidence you’ve been making timely mortgage payments for the last year or you are related to the original borrower.

All is not lost though if you can’t meet these requirements. You may be able to restructure your scenario as a purchase instead or depending on the appraised value of the property, you can reduce your loan amount to stay within the acceptable parameters for less than 24 months on title.

Chris Salese can be reached at chris@delsurmortgage.com or (707) 363-4439. He is a licensed California mortgage banker (NMLS 254469/1850 CA BRE 01377933/01215943) and equal housing lender.

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