Liability

• All co-signers on a mortgage are equally responsible for the mortgage loan. The lender will hold a co-signer liable for the debt. If the mortgage payments are not made, the lender may elect to pursue a foreclosure. The foreclosure doesn't single out one person on the mortgage loan but includes all signers. A foreclosure is a legal proceeding. Each co-signer is legally bound by the court's determination in the case and will share equally in the legal ramifications that result from the judge's ruling.
  
  

Deficiency

• A foreclosure may not remove financial liability for the mortgage loan. In certain states, lenders are free to sue homeowners for the difference between what the home sells for on the open market following a foreclosure and the outstanding balance due on the mortgage loan. This is called a deficiency. The lender has up to five years from the date of foreclosure to pursue this legal action and obtain a deficiency judgment against the signers on the loan.
  
  

Asset Seizure

• A deficiency judgment is a serious matter. The lender can seize the assets of the signers on the loan. This means the lender can pursue assets owned jointly by the co-signers or assets individually owned by the co-signers. This includes funds in a checking or savings account and a portion of earned wages, depending upon the laws of the state. Lenders can also place liens on other property that the signers own. Each co-signer is equally liable for the debt, which means the lender will go after the assets of all parties until the debt is satisfied. It can pursue these assets one by one or simultaneously.
  
  

Credit Record

• The loan for a mortgage appears on the credit report of all co-signers to the mortgage loan. A foreclosure, and the late payments that proceeded it, will also appear on the credit reports of all signers. A foreclosure is a public record. Late payments and foreclosures remain on the report for up to seven years and will hurt the signer's credit score. According to MSN Money, a foreclosure can drop your FICO score between 85 and 160 points and one 30-day late payment can drop it between 60 and 110 points.