A mortgage is a legally binding contract, so it is not possible to remove a name from the loan documents until the mortgage has been paid in full. According to the San Francisco Gate Home Guides, the mortgage loan can be refinanced in the name of the person who wishes to keep ownership of the home, or the property can be sold to settle the debt.
Until the mortgage loan is refinanced or sold, both parties who signed the documents and were approved for the loan are equally responsible for making payments per the mortgage terms, according to Mortgage News Daily. Regardless of who is living in the home, both parties are subject to collection efforts if the payment terms are not adhered to, including negative credit reporting, wage garnishments, lawsuits and tax liens in both names.
As noted by the San Francisco Gate Home Guides, if the property is refinanced and a single party takes responsibility for the payments, the co-signer on the original loan must sign a quit-claim deed in order to be removed from the deed. The quit-claim deed is then recorded in the county where the property is located. The original co-signer must also surrender ownership rights to the property. For this reason, particularly in cases of divorce, a judge typically orders the home to be sold in order to relieve both parties from the ongoing obligations.