Question about Co-signers and Bankruptcy

[2Bshinyandnew]

In late 2003 Mr. Doe, who had good credit and income co-signs a mortgage with his step daughter, Ms. Smith, who has OK credit and not quite enough income to qualify for the prime rate loan she wanted. She could have gotten a sub prime loan on her own at a substantially higher rate, but with Mr. Doe's signature, qualified for a 30 year fixed at 5.58%, with 25% down.

5 years later, Mr. Doe is in financial trouble and files BK. Meanwhile, his step-daughter, Ms. Smith has been paying the mortgage that Mr. Doe co-signed on time and as agreed. Mr. Doe's name is not on the deed to the property and has no ownership interest. There is significant positive equity in the property.

If Mr. Doe has all his debts discharged through a BK7, including the debt he cosigned on his step-daughter's property which he has no ownership interest in, will/can the mortgage holder try to change the terms of the mortgage since Mr. Doe no longer has any financial responsibility as a co-signer?

Ms. Smith has been paying the mortgage on her own for the last years.

Anyone know how Mr. Doe's BK will affect the terms of Ms. Smith's mortgage, if at all?

[Flamingo]

If Mr. Doe filed BK and included the cosigned mortgage, he should have received information from the attorney who handled the BK as to the situation. What should have been done here was for Ms. Smith to get the mortgage in her own name when Mr. Doe started to have financial difficulties to avoid having Mr. Doe's BK appear on her credit reports and avoid any other detrimental issues that could come out of this.

Ms. Smith should not stop any payments on the mortgage and contact the mortgage company ASAP about the situation and follow their instructions.