Co-signed a car loan for a friend three years ago, he missed four payments and my mortgage pre-approval just got denied. What are my options?
I am in a massive financial mess right now and I need some brutal advice on how to handle this. Back in 2023, my long-time buddy needed a car to get to his new job but his credit was absolute trash. I had a solid 790 score, so I stupidly agreed to co-sign a loan for a used Mazda. He was making the payments fine for the first two years, or at least that is what he told me every time I asked. I stopped checking the account online because everything seemed entirely under control .
Fast forward to this week. My wife and I are trying to buy our first house and we finally found a place. I went to get our mortgage pre-approval finalized, but the loan officer called me back with a flat out denial. My credit score plummeted down to 620. I looked at the report and discovered my friend missed four consecutive payments late last year. The account was practically on the verge of repossession before he caught up on the balance last month.
He never mentioned a single word about being broke or missing payments. When I confronted him yesterday, he just gave me some weak excuse about changing bank accounts and forgetting to set up the auto-pay. He claims everything is fine now because the account is current, but the damage to my credit profile is already done.
The underwriting team for the mortgage says they cannot clear us with those recent major delinquencies on my report. Our contract on the house has a financing contingency, but we are about to lose our dream home because of this. Is there any legal or financial mechanism to get these missed payments removed from my history since I was not the primary driver? Can I force the lender to take my name off the loan completely if he refinances?
I know I am the idiot here for co-signing in the first place, but I genuinely thought I was helping a guy out. Now my own family is paying the price for his negligence.