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Divorcing: who gets the mortgage?

With many areas around the country still experiencing property values in a downward direction, a new problem is emerging: who gets the mortgage when a couple is divorcing? A must-read article appeared in today's Washington Post discussing this growing problem with not a lot of solutions in sight. It's actually causing some couples to re-think their divorce plans! What many others are finding is that with values going down and rates going up, where two had qualified before, the remaining soon-to-be-ex-spouse is not able to qualify to carry the note alone. Most mortgage companies are refusing to remove or release liability for the departing spouse, putting the mortgage payment continuity at risk plus it's always better to have two incomes to go after if there is a resulting deficiency judgment.

So, who gets the mortgage? It depends mainly on the remaining spouse's ability to qualify to refinance the other party off the note, the current property value and the equity position to sustain the refinance. What experiences have you had in working with divorcing couples? What went well and what problems could not be overcome?

Dave Rosenmarkle

Broker Owner

Highland Realty

(703) 538-2566

davidrose@mris.com

www.HighlandAgents.com

Posted by Dave Rosenmarkle on 12/01/2007 10:30 AM

Comments (5)

refinance, divorce, real estate practice, mortgages, listings

5 Comments on Divorcing: who gets the mortgage?

I feel so sad when I handle divorce houses. I make sure to estabish contact with the attorneys on both sides, since that needs to be addressed sooner rather than later. If it's amicable we meet together and if not, two separate meetings with net sheets signed by all parties. Sad but often, it's better to sell that 'sad' house so both can move on with life.

12/01/2007 10:34 AM

by Leigh Brown Charlotte NC Broker/Owner (RE/MAX Signature Properties)

I think the Solomon-like approach is best in a divorce. Sell and split the profit, if any.

12/01/2007 10:41 AM

by Rosario Lewis, GRI ~ DDR Realty, Orange County, NY (DDR Realty)

Great advice... Keep us posted. I like to keep updated on the mortgage world

12/01/2007 10:43 AM

by Tennessee Real Estate & Community Blog. Christina Williams (FIRST REALTY Company Crossville )

If both are on the mortgage, both stay on the mortgage, unless as you suggest, the owner of the mortgage agrees to release one, but why would they. I think one party will have to get their own loan and buy out the other. If they dont qualify, then either, both stay on the loan, or they sell and split the proceeds, if any

12/01/2007 10:48 AM

by Ron Parise (LocateHomes.com)

Hi Leigh - you're right, it is a sad time, assisting a couple or a family to dissolve part of a formerly meaningful relationship.

Rosario - who wields the sword?

Christina & Ron - thanks for the comments

12/01/2007 01:22 PM

by Dave Rosenmarkle (Highland Realty)