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What to do with home mortgage?

Started by mistoffolees, Dec 12, 2006, 02:48:22 PM

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mistoffolees

I'm interested in what other people in my situation have done.

I filed for divorce in September. We had a home with both of our names on the mortgage, although I was the only income (my stbx is now working). 15 year mortgage with about 10 years left. Equity is probably about 1/3 of home's value and it's a nice upper middle class home in a nice neighborhood.

We agreed that my stbx would keep the home and my daughter would spend every other week at each home so I moved out (on my attorney's advice). I am giving her money out of every paycheck and she's saying that it's not enough (since the divorce, she has had 58.8% of our combined income and I'm paying all of my daughter's child care, medical, and extracurricular activities out of my 41.2%). She has threatened to stop paying the mortgage.

Since I need to protect my credit rating (I'll be buying a house in the spring), my attorney suggested that I pay the mortgage and deduct it from what I pay every month. No problem for now, but what happens when the divorce is final? For a few years, I'll be paying alimony, so we can set up the agreement the same way - I pay the mortgage and deduct it from the alimony. Eventually, though, the alimony ends, so I'm relying on her to pay the mortgage.

It's possible that she might be able to refinance in her name, but it would be a big stretch. Furthermore, I don't think she'd do it.

As I see it, I can live with it (my attorney points out that there's plenty of equity to pay off the mortgage if she defaults, as long as she doesn't default before I have my mortgage, I'd be OK). Or, I believe I can force the sale of the house - which seems like overkill.

Any other suggestions?

gemini3

If the house is in both of your names, she will be ruining her credit rating as well as yours if she defaults on the mortgage.

When the divorce is finalized, she will either have to assume the mortgage or sell the house.  I think that you can ask that all jointly held assets be liquidated and distributed as part of your divorce settlement.  You should ask Soc.

mistoffolees

My attorney has already explained that I have the right to force the sale of the house if stbx doesn't comply. I was hoping that there's something a little less drastic - since my daughter loves that house, I'd hate to see her affected.

In particular, how easy is it to get my name off the mortgage? Is she going to have to go through the entire application process or is there some streamlined process?

Thanks.

CGS

She'll have to reapply and requalify without you or your income before the bank will remove you from the mortgage.  Even if you sign a quit claim deed waiving your right to ownership of the home.. you are still on the hook for the full amount of the mortgage if she defaults until she refinances.

notnew

I don't think you should file a quit claim deed until your name is off of the mortgage. At that point, the issues you are discussing would be moot. If you filed for bankruptcy and you were released from the financial obligation of the mortgage, then filed a quit claim deed, the house would be hers - title and mortgage with no arguments. However, that may not be a viable option you want to exercise and may not be able to be acclomplished now with the new bankruptcy laws.


Is she requesting the court order use and possession of the home? That would mean she gets to stay there for 3 years (states may vary on the time). At the end of the use and possession period - she would have to buy you out or sell the house and pay the mortgage and split the profits with you.

I think you should go to socrateasers board with this one. I am not confident that your attorney is steering you in the best direction, but soc would know much better then I and the final decision is entirely up to you of course.

good luck. It sounds like it could be a mess.

mistoffolees

I'm confident that my attorney's advice is good - I was just exploring whether there are other options that I should discuss with my attorney.

This case is probably unusual because there's no risk of bankruptcy and even my wife's half of the marital assets are enough to pay off the mortgage several times over (unfortunately, a lot is tied up in retirement accounts, though).  If we have to force a sale, we can do that, and there's plenty of equity, as well. Furthermore, I'll be paying alimony for a couple of years at least so I can always set up the agreement so I pay the mortgage and deduct it from the alimony (I'm pretty sure she would go along with it, particularly if I tell her the alternative is a forced sale of the home).

So, I'm not so much worried about losing the equity in the house as I am in:
1. Making sure that my name gets off the mortgage or at least finding a way to guarantee that the mortgage gets paid so she can't mess up my credit rating.
2. If there's any way possible to accomplish #1 without forcing a sale of the house if I don't have to.

As an example, what if I could get her to agree in the settlement papers that the mortgage company could place a lien on her retirement money if she doesn't pay the mortgage. Would that be sufficient for them to then take me off the mortgage?

That's the kind of novel solution I'm looking for.

gemini3

I don't think the mortgage company would accept something like that.  I doubt they're going to take your name off of the mortgage.  I don't know why you're fighting to keep the house so much.

Maybe you could agree to some sort of property settlement where you pay the mortgage in leiu of alimony for x number of years, and after that period of time she can either sell the house or she can assume the mortgage.  That would give her enough time to be able to improve her financial/credit status to assume the mortgage.

The problem with all of these "novel" solutions is that you will remain contractually tied to her as long as your name is on the mortgage of the house she is living in.   Even if you are amicable now, you won't necessarily stay that way.  Your best bet is to suck it up and sell the house.  

mistoffolees

As I said, I couldn't care less about the house, but my daughter loves it and the neighborhood, so I'm trying to save her the pain of losing her friends and house (including the swimming pool she loves) at a time that's already very traumatic for her.

I have pretty much decided that I'm going to have to pay the mortgage and deduct it from the alimony (assuming she agrees and we get it in the final settlement) but was just hoping that someone might have done something else.

Thanks for your help.

notnew

being that you've stated  there are enough assets to pay for the house on both sides, I get the impression that there's a little bit of financial security in life for the both of you (I don't want to say wealth, but you seem to have more then enough and a little extra to live comfortably). Don't take it offensively, just giving you my observation.

When lawyers get their paws into a case that's got a little bit of $$$ attached to it, they have a tendency to stir the pot some to further their own cause if you know what I mean (NOT all, but enough to have earned the reputation). If your STBX's attorney sees a way to get more money by dragging out the settlement and causing your STBX to become hard to deal with an unwilling to settle, it could spell trouble.

Just wanted to say keep a close eye on what's happening so you don't get sticker shock at the end of the line when you get handed a bill.

I hope you get things worked out in a way that gives your child as little emotional upheavel as possible. It's nice that you are thinking along those lines. Let's just hope your STBX feels the same way!

good luck.

mistoffolees

Thank you for your concern.

I'm not the least bit worried about my attorney. She's (IMHO) the best famil practice attorney in the state and most people who know here agree. Not only is she more tenacious than a bull dog when she needs to be, but she's very, very careful to keep costs down. She works incredibly fast, so she gets more done per hour than anyone I know (her rates are just a bit higher than the others, but with her greater efficiency, I come out ahead).

My stbx's attorney, OTOH, is the exact opposite. He doesn't know family law all that well, so he's running around in circles wasting time on stupid things. He has a reputation in town as someone who's only out for his own pocketbook - even in litigation where he does know what he's doing (the story is that his wife likes really big diamonds, but that's probably just rumor). He's spending time in wasteful efforts and my stbx is so vindictive that she's going along (not realizing that she's paying for it, too). So far, my attorney hasn't expended my retainer yet, while her attorney has been back for more money twice - even though we're doing most of the work (since I filed).

The sad thing is that there's no need for it. My state is one where assets are split 50:50 and there are almost no exceptions. It's not that hard to add up the asssets and split them - and we proposed that ages ago. Granted, one could quibble about things like the value of the home, but as near as I can see, one could possibly question about 1% of the total assets - and it would be easy enough to reach an agreement without spending a fortune if they were the least bit reasonable.

Unfortunately, there's nothing I can do about her attorney, except that when he does something REALLY ridiculous, we're filing motions for them to pay our attorney fees. I won't know until the end if we're successful.

Emotionally, I'm better off than I've ever been, but it's stressful because she keeps hanging custody over my head. My daughter was always closer to me than to her mother (by a large margin), so I can't imagine how devastating it would be for her if the mother wins and limits me to every other weekend.