Mortgage Loan and Divorce

**beks37** · 11-22-2010, 06:55 PM

I have a friend who went through a divorce recently, it was finalized in June of this year. The house and the mortgage went to his ex-wife and it says so in the divorce decree. So, that means that his name should be removed from the house and the mortgage and he should not have any liability for it, right?

Well, the ex-wife works part-time and is basically living off the new boyfriend. She is unable to qualify on her own for the mortgage, so she has left the house and mortgage with both their names on it. She moved out of the old house and bought a new house with new boyfriend before the old house was sold. Now, the old house sits empty waiting to sell and the ex-wife has been threatening that if she doesn't have the money, she won't pay the mortgage.

Well, my friend has limited funds and pays his ex-wife $900 a month in child support and then has barely enough to pay for a 500 sq foot apartment and expenses. So, he is unable to contribute any to the mortgage (even though he is not legally liable) so the house payments will be up to date.

Is there anything he can do? Because he has good credit now and I'd hate to see it ruined because of this.

**MaryCarney** · 11-22-2010, 11:18 PM

Pretty sure a divorce decree does not 'take someone off' a mortgage. If she did not get a new mortgage in her own name alone - he is still liable.

**Neeley** · 11-22-2010, 11:28 PM

I do not have any first hand experience, so my knowledge comes strictly from helping my mom from a recent divorce. She and her then husband divorced two years ago. He got the house and the mortgage and my mom got a cash settlement. My DH made sure that my mom had it put in the divorce that the soon to be ex had until a certain date to get the house refinanced in his name only so that my mom's credit would not be affected if he defaulted or ran late on any payments. Her lawyer told her whether or not they were divorced did not matter. As long as her name was on the mortgage, she would still be responsible for the mortgage .

**frugalwarrior2** · 11-23-2010, 12:11 AM

They commited to the loan together. So he is liable w/ his name on it. He needs to go back to court.

**Greebo** · 11-23-2010, 04:56 AM

Originally Posted by beks37

I have a friend who went through a divorce recently, it was finalized in June of this year. The house and the mortgage went to his ex-wife and it says so in the divorce decree. So, that means that his name should be removed from the house and the mortgage and he should not have any liability for it, right?

Should not. Not does not.

The divorce decree affects two parties - him and her - not the bank.

The divorce decree makes it HER RESPONSIBILITY to get a new loan to take him off of it - it does not change the existing loan.

So if she defaults on the loan, he's going to be liable as long as he's on it.

Well, the ex-wife works part-time and is basically living off the new boyfriend. She is unable to qualify on her own for the mortgage, so she has left the house and mortgage with both their names on it. She moved out of the old house and bought a new house with new boyfriend before the old house was sold. Now, the old house sits empty waiting to sell and the ex-wife has been threatening that if she doesn't have the money, she won't pay the mortgage.

Basically she's in contempt of court.

Your friend needs to go back to his lawyer and get advice on what to do next. Since she is supposed to be responsible for the house, *he* should have no liability for it - so when it does sell, if he keeps up the mortgage, he should be compensated for every penny.

He should *NOT* give her more money - he can't trust her to pay the mortgage. His best course of action, IMO, is to keep the mortgage current, and use the courts to force the house to be listed if it isn't already - and finally use the courts to get back every penny he pays to maintain the mortgage post divorce.

So lets say that post divorce he pays $1,000 a month to maintain the mortgage for 6 months - so he's out $6,000 he shouldn't be. So when it sells he should get that $6,000 back. Since the divorce made the house "hers" - that's ALL he should get back - not 50% plus 6k - just his 6k.

Again, that's what he SHOULD do and what SHOULD happen.

Well, my friend has limited funds and pays his ex-wife $900 a month in child support and then has barely enough to pay for a 500 sq foot apartment and expenses. So, he is unable to contribute any to the mortgage (even though he is not legally liable) so the house payments will be up to date.

He *is* legally liable to the lender. He owes them, and she's supposed to assume that responsibility, but until she does so, he's still responsible. That makes her responsible to him - but doesn't change his responsibility to the lender.

This is why he needs to get the judge involved.

However, since funds are limited - he may have no real choice left here. He can either get more money to pay the mortgage till it sells or the court forces her to take it over, or he can let the house go, which will trash his credit. The latter *may* force him into bankruptcy - but since a BK is worse than a foreclosure, he won't really be BK unless they first lose the house and the bank then comes after him for the difference after the BK sale of the house. If he's in a non-recourse state, he won't be BK.

Is there anything he can do? Because he has good credit now and I'd hate to see it ruined because of this.

We attach far too much importance on credit ratings. Look at what his good credit rating has gotten him? A house with a wife who he divorced, that neither of them can afford.

**frugal is fun** · 11-23-2010, 09:19 AM

yup, Greebo said it all. Have him contact his attorney and take her back to court and the court will force her hand.

When I got divorced my ex got the house. The divorce was final in June, he got a new mortgage in September, paying off the old loan and hence ending my financial responsibility to the house and we did a Quit Claim on the deed. Thats how its supposed to work.

**Nishu** · 11-23-2010, 09:33 AM

Originally Posted by Greebo

Basically she's in contempt of court.

Your friend needs to go back to his lawyer and get advice on what to do next. Since she is supposed to be responsible for the house, *he* should have no liability for it - so when it does sell, if he keeps up the mortgage, he should be compensated for every penny.

He should *NOT* give her more money - he can't trust her to pay the mortgage. His best course of action, IMO, is to keep the mortgage current, and use the courts to force the house to be listed if it isn't already - and finally use the courts to get back every penny he pays to maintain the mortgage post divorce.

Whoah... We're telling him not to give her money to pay the mortgage, right? We're not telling him to stop paying $900 a month child support?

**beks37** · 11-23-2010, 10:41 AM

Not what I'm sure he wanted to hear, but I'll tell him he needs to do something. His ex-wife is not wasting any time getting re-married either. Just got engaged a couple of weeks ago, getting married on December 30th.

He pays his child support on time each month and is going to continue to do that. He is not getting any money from the sale of the house either. He left it all to her. They had only lived in the house for 3 years, so I imagine there's not a whole lot of equity in it.

**Greebo** · 11-23-2010, 11:05 AM

Originally Posted by Nishu

Whoah... We're telling him not to give her money to pay the mortgage, right? We're not telling him to stop paying $900 a month child support?

Correct. I could have been clearer - I meant that he should not give her any more money than he is already giving for Child Support.

**Greebo** · 11-23-2010, 11:07 AM

Originally Posted by beks37

He is not getting any money from the sale of the house either. He left it all to her. They had only lived in the house for 3 years, so I imagine there's not a whole lot of equity in it.

Probably not - but any money he pays to the mortgage past the court ordered settlement date is money he shouldn't have to pay and thus is money she owes him. *IF* there is any profit from or equity in the house, the court *should* recognize his entitlement to take what he's owed before she gets a penny.

**Nishu** · 11-23-2010, 12:58 PM

Originally Posted by beks37

Not what I'm sure he wanted to hear, but I'll tell him he needs to do something. His ex-wife is not wasting any time getting re-married either. Just got engaged a couple of weeks ago, getting married on December 30th.

He pays his child support on time each month and is going to continue to do that. He is not getting any money from the sale of the house either. He left it all to her. They had only lived in the house for 3 years, so I imagine there's not a whole lot of equity in it.

So what you mean when he "left it all to her" is that he left her with a house that's probably carrying more mortgage than resale value.

If they only bought it 3 years ago, then she's probably not going to make anything from the sale. If she's already buying a house now, then she's probably doing it before the nonpayment on her old mortgage ruins her credit.

Whatever he does, he needs to do it now.

**The Muse** · 11-23-2010, 01:05 PM

I was divorced earlier this year and we had to refinance to get my name off of the mortgage. Until then, I was still liable.

What, exactly does their decree say? It's rarely as straightforward as "Plaintiff gets house and mortgage". Mine had a certain time limit for the refinancing to take place and for me to receive a payout of equity.

In any event, he needs to get his name off the mortgage, ASAP.

**Nishu** · 11-23-2010, 01:36 PM

So, rereading this, I think maybe he should go back to court and try to get the house and it's (likely nonexistent) equity.

Technically, she may be required to take over the mortgage, but I'm not sure what enforcement that will involve. So we know she couldn't refinance the house on her own, right? We also know that she now has a new mortgage with her new boyfriend. Is it in her name? If that's the case, he may as well forget about her getting the mortgage out of his name. There's no way she's going to be able to refinance, least of all with part time employment and a new mortgage. I doubt very much the bank will be willing to take his name of the mortgage considering the circumstances. Who would pay?

In short, he can cry for her to take his name off the mortgage all he wants. It's not going to happen.

She obviously doesn't want the house and it's unlikely to have any equity. He could probably get it back pretty easily. I'm not sure exactly how quitclaims work, but if she signs one she'll give up property rights without getting her name off the mortgage. That way, he won't have to worry about refinancing or the possibility of he coming back and trying to get the house. Plus, it will keep both of their credit reports clean(er than having a foreclosure.)

Anyways, he needs to talk to a lawyer.