Cosigner rights on mortgage loan

[jcastle]

North Carolina -- My father co-signed for my sister's mortgage. He recently discovered (when applying for a loan himself) that she was 5 months behind on payments and the foreclosure process had been started. He spoke with the foreclosure attorney and delivered a check to get the loan up to date and out of foreclosure. Now he's dealing with his credit score having dropped 150 points because of this. 1) Should the lender have notified him before starting the foreclosure process? 2) Can he have his credit restored since he has brought the loan current?

[Zigner]

Originally Posted by jcastle

North Carolina -- My father co-signed for my sister's mortgage. He recently discovered (when applying for a loan himself) that she was 5 months behind on payments and the foreclosure process had been started. He spoke with the foreclosure attorney and delivered a check to get the loan up to date and out of foreclosure. Now he's dealing with his credit score having dropped 150 points because of this. 1) Should the lender have notified him before starting the foreclosure process? 2) Can he have his credit restored since he has brought the loan current?

1) Not necessarily

2) The score accurately reflects the credit history for his obligations.

With that said: The lender *may* accept documentation showing the situation. However, if your sister should default in the future, then your dad is STILL on the hook for her loan. The new lender needs to keep that in mind.