My partner and I met with a seller yesterday, a very attractive but sad looking woman in her early 40's. We were referred to her by her divorce attorney, who had gotten our name from the president of our company. As part of the settlement for the divorce, they will need to sell their home, a property that has perhaps the worst external obsolescence possible - a ring side seat of the freeway!
While they bought the property long enough agothat it theoretically should have realized at least some appreciation, the soon to be ex-husband refinanced the home almost 2 years ago, paying off the rather low outstanding loans, rolling them into one 80% LTV loan, and taking out the difference in cash. Unfortunately,
- the market has steadily declined since then, probably around 1% per month in this area over the last two years.
- the market was already declining at that time, but nothing like the depreciation it would experience once the financial markets started crumbling in the fall of 2008.
- the husband, in typical fashion of the times, got a low doc loan, one that he could not really afford, and that the bank never should have given him.
The wife, our client, had absolutely no idea, not only that she would not realize any proceeds from the sale of the home since there was no equity left whatsoever, but that the sale would actually be short.
Never have I nor my partner had to deliver news to a client that was so devastating and so unexpected. She is already experiencing deep pain and grief from the infidelity and loss of her life partner, but she learned in one quick moment that her plan to buy herself a small home, a condo, with her "settlement" proceeds is going to be impossible. She will be left with nothing.
The only good news isthat, when her husband refi'd 20 months ago, she thought the idea was crazy and refused to sign the loan docs. She is on title, but not on the loan. She should just quitclaim it over to the ex, and let him deal with it...
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