Co applicant in home loan

Apply to Legal Services authority making the Husband and the bank as parties and get an award passed relinquishing all her rights and responsibilities for the Bank loan.  This may not cost single rupee, but the husband must provide alternate co-applicant / co-obligation of equal or more than net worth of the existing co-applicant.

After divorce if Ex. Wife does not become Co-applicant and signs as Co-applicant in any loan document her liability is NIL, Zero.

For current loan if the exclusion of wife was inserted in T&C for MCD then press these or resolve this matter  also with the husband.

Since you have agreed on recourse thru MCD resolve all matters and don’t leave any heartburn for future. Agree to give up title/share/claim on property also. The husband may agree.

I respectfully disagree with the advise of Mr. GLN Prasad.

Legal Services Authority do not enjoy any such powers to over-ride the decision of Family Court granting divorce with mutual consent of the parties. LSA can not assume jurisdiction suo moto and/or on an application to implead Bank and ex-husband as advised. 

Your niece has to make a condition for relinquishment of her share in the flat as well as in the loan, wherein she is co-applicant in the settlement deed with her husband, before final decree of mutual consent divorce, otherwise the banker (lender) shall be entitled to recover outstanding amount from both/either of them.

Alternatively both of them (your niece and her husband) must repay the loan and get it endorsed in the title documents of the property before parting their ways.

If husband and wife compromise on certain settlements like husband exclusively taking up the loan, they can enter into compromise and get the award through LSA.  My advice is confined to this single point alone.