Ask Terry Questions Fear of lien / Student Loan Cosigner

Fear of lien / Student Loan Cosigner

By Terry Savage on March 08, 2015 |

About seven years ago my mother cosigned for a $25,000 non-governmental student loan for a granddaughter. I had her transfer the house to my brother about two years ago because she started to get letters that my niece had fallen behind. I don’t see my niece making this debt good anytime soon and my mother is going to be 83.
I’d like to put the home back in her name so she can do a reverse mortgage but fear a lien. We’re not sure what to do. She could use the money. She has money coming in from a family business but she is afraid because it is not guaranteed. her children are long grown and I’d like her to enjoy herself. She is in good and has a long term care policy.

Terry Says:  Oh, what a sad story.  For sure, nothing illustrates the problem of co-signing better than your post.  And where is that grand-daughter now?? Does she have a job, or any assets?  Does she understand what her failure to pay is doing to her grandmother’s life?  You really should have a discussion with her.

But if she does not, or will not, or cannot pay then they will definitely come back to your mother.  That means any assets she has are subject to a judgment in court.  I suggest talking to the lender and explaining the situation.  Maybe they can agree to simply default the loan.  You definitely don’t want to have her home in her name given the circumstances.  And that does deprive her of the right to a lifetime income via a reverse mortgage.  And the money “coming in” from a family business, if sitting in a bank account, would  also be subject to any judgment.  I think you need to see an elderlaw attorney to deal with the specifics of this situation.  Go to (national assoc of elder law attorneys) to find one in your area.

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