My Ex-wife Decided to Short Sell Her House and I am Still on the Mortgage

Real Estate Agent with Buyer, Sellers, First-Time Home Buyers SA555550000

If you are going through a Divorce or know someone going through a Divorce, you must read this.  In today's real estate market, most houses have to be sold short.  The disposition of the marital property must viewed differently.  Short Sale before or after the divorce?  That is the question.  Waiting until after, could set the stage for some real problems down the road.

Original content by Dave Halpern

Spouses incur so many risks when they decide NOT to get rid of the marital home and the marital mortgage debt.

If the house is “underwater” or has an “upside down mortgage”, they can short sale the house before or after the divorce is final. Waiting to sell after the divorce could spell disaster.

Just look at these questions asked by a concerned ex-husband who has lost control

  • My ex-wife decided to short sell the house after the divorce. I am still on the original mortgage. The court had awarded her this home a few years ago when we divorced. The house is worth about $100,000 less than the mortgage. What are the ramifications for me, having a a good job and assets?
  • The lender may forgive the deficiency and issue me a 1099-c for their losses which may become taxable income to me.
  • I heard that when the home is a primary residence the borrower may be exempt from paying taxes on the cancelled debt. But, will I have to pay tax, since technically that home is not my primary residence anymore?
  • Will I have to pay taxes on the whole amount or just on half with the ex-wife paying tax on the other half?
  • Does being divorced and house being awarded to the ex make any difference what so ever?
  • Another scenario may be the bank not forgiving the deficiency. Will the bank then sue me alone, since I am employed and my ex is not?
  • If the bank gets a deficiency judgment what power does that give them? Wage garnishment? Sweeping money out of my bank accounts? Forcing the sale of my assets?
  • How do I contain my losses?
  • What other risks am I incurring that I don’t even know about?

Wow. The problem is these are all valid questions.

All the above questions have complicated and fact-specific answers that need to be addressed by divorce attorneys, tax attorneys or CPA’s. A debt specialist attorney such as bankruptcy attorney or collections attorney may need to be consulted, also.


The frustrating problem is these questions should have been addressed and reflected in the divorce agreement that was crafted years prior.

  • The post-short sale or post-foreclosure tax and judgment burdens may be disproportionately carried by the husband, in this case.
  • These heavy losses were probably not calculated in the division of assets agreement.
  • How likely is it the divorce agreement will be amended and have the ex-wife sell assets or write a check to the ex-husband to cover his new disproportionate burden? Not very likely.
  • Who will pay the divorce attorneys to negotiate a new deal?

The Lesson: Pay Careful Attention to the Future Risks of the Marital Mortgage Debt

Yes, the habitual residence is a key consideration of child custody issues. Yes, keeping the marital home is often a trophy and a victory. But in a depressed housing market the mortgage debt may explode later on, causing more damage to one or both of the ex-spouses than the financial or emotional victories gained in the divorce battle.

During the divorce, the spouses and the divorce lawyers should consult with a Realtor who is a short sale specialist. The Realtor should also specialize in divorce situations.

In the Louisville KY are please call Dave Halpern any time at (502) 664-7827.


Dave Halpern

Real Estate Broker, Louisville Short Sale Expert Realtors

(502) 664-7827


Sellers looking for foreclosure help in Louisville, KY should call Dave Halpern, Realtor, Louisville Short Sale Expert Realtors, (502) 664-7827. I will dedicate to you all the time you need for a full explanation of the process. We are compassionate, caring and patient. I will listen to your needs and wishes and customize a strategy to meet your circumstances.

I will provide you detailed information about foreclosure options and short sales. We help dozens of sellers avoid foreclosure every single year in Louisville, Jefferson County, Oldham County, Bullitt County, Shelby County, Nelson County and Spencer County.

We can help. You have options. Call even if you think your house isn't sellable. Put an expert real estate agent on your side. Many testimonials available.

Dave also trains other Realtors how to perform successful short sales.

IMPORTANT NOTICE: is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit. We do not provide legal advice, you are encouraged to seek legal counsel. We cannot and will not charge upfront fees.

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Posted by

Amy S Plotts 

Arizona Real Estate Agent

Keller Williams Realty Professional Partners

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Comments (2)

Dave Halpern
Dave Halpern Real Estate Agent, Inc., Louisville, KY (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert


Thanks for reblogging! Short sale Realtors end up fixing problems years after the divorce is final.

Jun 06, 2011 06:03 AM
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Amy, I have seen so many sellers, and many Realtors as well, who know that the ex-husband has "quit claimed" his interest in the home to his ex-wife.  The problem almost always is... they all that does is take away any control the ex-husband has over the home... but pretty-much does nothing as far as being responsible for the mortgage.


Sure, this does make sense, but the only way the debt will not be an obligation of the ex-husband is if the ex-wife refinances it.  That is usually impossible, because she bought with both her and her husband's income, and her getting a new loan based on her income only is not something she would qualify for.

Jun 07, 2011 03:51 PM