Gene Mundt in Chicagoland has posted a great piece on something too few people think about when getting a divorce/dissolution. It even seems that many attorneys may not realize there is anything for them to do after the first two steps Gene mentions. However, without the latter steps as well, the home could come back to bite the non-residing ex-spouse.
New Trend: Rising Home Equity = Rising Divorce RateEquity and home values have recently begun rising again across America. RealtyTrac® stated in its U.S. Home Equity & Underwater Report for September 2013, that ...
"8.3 million homeowners are either slightly underwater or slightly above water, putting them on track to have enough equity to sell sometime in the next 15 months — without resorting to a short sale."
That Report offers welcome news to U.S. homeowners that saw their equity disappear during the housing recession. But evidently it's especially good news for those couples that put their Divorces on hold because their marital home's value had diminished so greatly during that time.
Divorce Attorneys, Realtors, and other financial professionals are now reporting a rise in the amount of business activity they are seeing directly linked to rising home equity. Simply, couples that could not previously divorce because of financial reasons tied to the value of their home (i.e. they were incapable or unwilling to take the financial loss on the sale of their marital home ... or didn't want to suffer through the hit to their credit standing) are now taking action.
Those same professionals are predicting that the number of couples that will take action based on rising equity will only continue to rise. Why? The current rise in home values and equity allows couples the freedom to rid themselves of each other without as many financial/credit consequences.
As a Mortgage Lender, this news brings a mixed reaction. No one wants to see the number of broken homes rise. But the situation also offers an opportunity to increase awareness and educate divorcing couples about the legal and financial actions that will protect them best as they proceed through their Divorce and move forward with their lives.
This is important whether they hope to sell the home they purchased with their former spouse (or soon-to-be former spouse) to an outside party or to remove a former spouse from ownership. It's also true if a sale of the former marital home is to take part between the divorcing couple and one former spouse buys from the other.
It's important to know that any Mortgage and credit obligations regarding the jointly-owned (marital) home will remain yours, unless you take the following action:
- Settle the agreement regarding the marital home, i.e. ... Do we sell the property or will one party remain?
- If retaining the marital property, a Quit-Claim Deed must be prepared by legal counsel transferring the Title and rights to the property to the remaining spouse.
- If there is outstanding debt on the marital property, the remaining or residing party must Refinance to His/Her name ONLY, allowing the exiting spouse to be relinquished of the Mortgage debt.
- Any joint debt or assets to be split must be evidenced in the Divorce Decree and the creditors advised in writing of the removal of one of the parties to affect the Credit Report properly.
- Consult your Attorney and professional Mortgage Lender before taking any actions, such as listing the property or buying another property.
I can't tell you how many Divorced clients I've seen over the years that were not aware that they were still considered a responsible party for their former marital home's Mortgage. The proper legal steps and recordings had not been taken to remove them of their obligation.
That's a rough thing to discover while in the process of buying a new home. That's definitely true if the former spouse has not made monthly payments in a timely fashion. Rectifying a credit or legal issue at that point in a new purchase can be very stressful and also cost Mortgage Applicants valuable time.
For that reason, I suggest strongly that if you have Divorced at any point ... and are considering the purchase of a new home now or in the near future ... that you speak to me immediately. I will check your Credit Report to see if any prior obligations are still showing there and help pave the way to a smooth transaction.
By taking this very important step, you've allowed us ample time to address any issues that might still remain regarding your Divorce, credit, or credit obligations and it does not hamper or slow down your new purchase transaction and Mortgage Process.
A New Trend: Rising Home Equity = Rising Divorce Rate. If the trend reported is correct, this will be an issue of interest to many. Both the Divorcing couples and the professionals that represent them in their upcoming new Home Buying transactions. Act proactively in your own best interests and contact me ...
* Hoping to Buy a Home or Refinance in the Chicagoland area now or in the future? Contact me today! I'll put my 36 years of mortgage experience and expertise hard to work on your behalf.
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Regional Manager - Mortgage Lender
American Portfolio Mortgage Corp.
Personal NMLS #216987
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Gene Mundt, Mortgage Lender, a Lender with 36 years of mortgage experience, will offer you exemplary mortgage service and advice when seeking: Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans in Chicago and the greater Chicagoland region, including: The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, Plainfield, Bolingbrook, Romeoville, Naperville, etc.), DuPage County, the City of Chicago, Cook County, and elsewhere within IL. Gene Mundt, Mortgage Lender can be contacted at: 815.524.2280 or via his email: firstname.lastname@example.org.
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