Michigan woman to dip into her $50,000 in stocks to cover her brother-in-law's unpaid HOA fees or face foreclosure

Michigan woman to dip into her $50,000 in stocks to cover her brother-in-law's unpaid HOA fees or face foreclosure

Vawn Himmelsbach

Sun, August 30, 2026 at 3:30 PM GMT+3 7 min read

If you've ever been asked to cosign a loan, you know that it's a major decision — and many financial experts would actually advise against it.

Why? Take Veronica, from Detroit, who called into "The Ramsey Show" after finding out her husband could be on the hook for a substantial chunk of cash after cosigning a loan for his brother.

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Veronica's brother-in-law asked for help buying a condo back in 2021. Since then, he's been paying the mortgage, but he stopped paying his homeowner association (HOA) fees more than a year ago. Now, Veronica's husband has been notified that he, as the cosigner, is on the hook for $10,000 in overdue fees.

And if those fees aren't paid immediately, they face foreclosure on the condo.

Veronica's brother-in-law has been trying to sell the condo. But, at the time of the call, the condo had already been sitting on the market for 81 days, even though it's priced below the original purchase price of $220,000. There's currently $172,000 left to pay on the mortgage loan.

"This is why you do not cosign," co-host Rachel Cruz told Veronica, adding later that if the bank doesn't trust the person taking out the loan, you maybe shouldn't either.

When cosigning a loan backfires

Financial hurdles have caused nearly three-quarters (74%) of prospective homebuyers to delay or reconsider buying, according to the 2026 FICO Homeownership Survey.

That could be why an increasing number of first-time homebuyers — particularly young adults — are relying on support from friends or family members. Nearly a quarter (24%) of Gen Zers and millennials who recently bought a house used family money, such as a cash gift or inheritance — to help fund their down payment, according to a Redfin survey.

Cosigning is another option, which can help those with a limited credit history (or a low credit score) qualify for a loan. But if the primary borrower defaults on the loan, it means the cosigner is on the hook.

In Veronica's case, her husband is on the hook for the $10,000 in overdue HOA fees. While they don't have enough cash on hand to pay the $10,000 outright to stall the foreclosure, Veronica does have about $50,000 in stocks sitting in a brokerage account.

"If you go through foreclosure, it's going to be much more financial damage than this 10K," co-host George Kamel told Veronica.

He recommends selling off enough in stocks to pay what's due to avoid foreclosure. "Then you're going to write up a contract with a real estate attorney to recoup that amount when this condo sells," Kamel said.

That means the brother-in-law "will not see a dime" of the sale until Veronica and her husband are paid back, Kamel added.

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The risks of cosigning

While cosigning a loan can help a friend or family member establish better credit or secure a loan they wouldn't otherwise qualify for, it does come with a significant amount of risk.

First off, when you cosign a loan, your debt-to-income (DTI) ratio increases. This is your total monthly debts divided by your gross monthly income. If your DTI is high, above 43% is deemed unfavorable, it could make it harder to qualify for other loans in the future (say, if you want to refinance your own mortgage) until the loan you've cosigned is paid off.

The obvious risk, of course, is if the primary borrower defaults on the loan, then the responsibility of paying it back falls to you. In some cases, that might mean you're hounded by collection agencies or threats of lawsuits.

If the loan repayment is more than 30 days overdue, then it could also hurt your credit score — not just the borrower's. And if the account is sent to collections, even if you weren't aware of any missed payments, your credit score tanks, too. This can stay on your credit report for up to seven years.

Also keep in mind, once you've cosigned a loan, it's hard to get out of it (many loans don't have a cosigner release option).

"The lender and the main borrower must both agree to remove you from the loan and release you from responsibility to pay. The lender isn't likely to release you because it would increase the risk for them," according to guidance from the Federal Trade Commission.

Even if the primary borrower wants to refinance the loan in their own name, this likely won't be an option if they haven't already improved their credit profile.

Another risk? It strains personal relationships — sometimes to the point where the damage is irreparable. Veronica's relationship with her brother-in-law may be damaged after this incident, and the fact she has to sell her own stocks to fix the problem could put a major strain on her own marriage.

Setting some ground rules before cosigning

You can cosign any number of loans, including auto loans, student loans, personal loans and credit card agreements. The risks are similar to mortgages. Before agreeing to cosign a loan, set some ground rules.

Ask the borrower to show you a budget and plan for how they'll repay the loan (and make sure that repayment plan is realistic). You can also ask the lender for monthly loan statements or alerts if the primary borrower misses payments, so you can deal with it before the situation escalates.

If you've already cosigned a loan and you're not in regular communication with the primary borrower, check your TransUnion, Equifax and Experian credit reports regularly for any missed payments.

An alternative to cosigning a loan is to lend the money to your friend or family member instead — though only an amount you can afford to lose. You could also consider gifting some money — say, for a down payment — but be clear that it's a one-time gift and won't be happening again. Otherwise, you could find yourself back in the same situation a few years down the road.

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This article originally appeared on Moneywise.com under the title: Michigan woman to dip into her $50,000 in stocks to cover her brother-in-law's unpaid HOA fees or face foreclosure

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