Divorce - Mortgage Payments Too High and Owe Too Much to Sell. What To Do?

Real Estate Agent with Keller Williams Realty Louisville East (502) 664-7827

How about getting rid of the mortgage debt altogether via a short sale? Let’s explore.

Dividing the excess home equity in a divorce used to be a primary point of contention. Today it seems that dividing the debt is a primary issue.

Millions of homes nationwide have “underwater mortgages” meaning more owed than the house is worth. Leaving that debt in place is fraught with peril.

What if I deed my house to the other spouse?

Remember, no matter what the divorce agreement says, the parties who originally signed their obligation on the existing mortgage debt remain personally liable to repay the loan.

Transferring ownership of the house DOES NOT automatically release the borrower’s liability on the debt unless the debt is paid off in the transfer or refinanced into the other spouse’s name only.

Doing a “quitclaim deed” is not enough.

  • If the loan has not been paid off, the original borrowers are still on the hook.
  • If the mortgage payments aren’t made, all borrowers get their credit "dinged."
  • If the house gets lost to foreclosure, all borrowers could be pursued with a deficiency judgment, which could lead to wage and bank account garnishments.

The lender simply does not care about the divorce agreement, divorce court orders or what the divorce lawyers or mediators agreed to. Those agreements only reflect the dispute resolution and payment arrangements between the spouses and does not obligate the lender to release one of the borrowers.

When it comes to the mortgage debt, it is also a good idea to consult with a real estate attorney.

How about getting rid of the mortgage debt altogether?

Even if there is too much owed on the house, there is a process called a “short sale.” In a short sale, the lender allows the house to sell for an amount SHORT of the payoff. The lender allows a short sale if they believe it is in THEIR best interest rather than enduring the tremendous cost of a foreclosure on an unsustainable mortgage.

A successful short sale in a divorce situation can avoid years of stress and disputes between the spouses.

Call a Realtor who specializes in short sales

If in Louisville, KY or surrounding counties please call me, Dave Halpern, Real Estate Broker of Louisville Short Sale Expert Realty Company. I am local, I am real, and have helped many divorcing couples get rid of their risky mortgage debt forever. I will gladly discuss all aspects of the short sale with you and/or your divorce attorney. You can check out my website customized to divorce and foreclosure and short sale issues: www.LouisvilleDivorceForeclosureShortSales.com

Your lender pays all real commissions so you don’t have to. Many testimonials available.

Not intended as legal advice. Please consult an attorney on all legal matters.


Posted by



Dave Halpern, Realtor

The Dave Halpern Real Estate Group

Keller Williams Realty Louisville East

Website David.DavidHalpernRealtor.com

(502) 664-7827



View Dave Halpern's profile on LinkedIndave_halpern twitterhalperndave_facebookDave Halpern QR CodeLouisville Foreclosure Realtors Dave Halpern


This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Home Selling
Kentucky Jefferson County Louisville
Short Sales Specialists
The Ninety-ninth Percentile
Divorce and Real Estate
Build a Better Blog
Voice of Reason
real estate agent
mortgage payment
short sale realtors
divorce lawyer louisville ky

Spam prevention
Show All Comments
Goran Utvic
606 Homes LLC | Chicagoland Brokers Inc, Chicago IL 60656 - Chicago, IL
We Buy & Sell Chicago Houses Fast

Dave - great post. Many divorcees believe that if they leave the house the ex is liable but when the foreclosure happens they both are affected.

Short sale is definitely a solution to this problem.

May 08, 2011 03:29 AM #1
Brian Madigan
RE/MAX West Realty Inc., Brokerage (Toronto) - Toronto, ON
LL.B., Broker


Good post. These issues can be quite complicated. very often one of the two parties does not receive helpful advice, and then they both lose out.



May 08, 2011 04:26 AM #2
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?


Dave Halpern

Louisville Short Sale Expert
Ask me a question

Additional Information