My grandmother and I purchased a house together in 1998 (FHA loan fixed interest rate).  I'm the owner and she's the co-owner on the mortgage agreement.  My grandmother is on a fixed income (social security) and has been since we were approved for the loan.  I moved out in 2002 and left her in charge of making the payments.  She refused to sell the house because she wanted to stay.  I quit claimed the house in 2006 but I'm still responsible for the loan. Therefore, I no longer have any ownership rights.  She filed bankruptcy about in 2003 and was 3 months behind in 2009.  I made her late payments and set up an automatic payment from her bank account to the mortgage company since then.  I'm married now and trying to get a new home.   My debt/income ratio is not entirely accurate because the mortgage is included.  My grandmother is 85 and I was told that if she passes away I can't sell the house because I gave up my ownership rights but I'll still have to make the payments.  I contacted the lender and requested an assumption request for my grandmother.  Do you think Bank of America will approve the assumption even though my grandmother's social security check is her only source of income?  If the bank doesn't approve it, how do I fix this problem?

This problem is more and more common - what you might want to do is explore a reverse mortgage for your grandmother - this will allow you to not be on the mortgage, and your grandmother stay in the home. 

Elizabeth,  You want to request a Release of Liability from Bank of America in writing. Yes, your grandmother would need to qualify on her own. If Bank of America does not approve the Release of Liability, then you will be liable until the note is paid in full. I would encourage you to talk with a HUD Approved Counseling Agency in your area http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm. A reverse mortgage may be an option depending on how much is owed on the home and the equity in the property.