There are 9 community property state. Each state has its own specific rules. However generally any property acquired during a marriage is considered community property. It is possible to acquire property during a marriage and keep its nature as separate property but there are very specific rules that must be followed and in most cases it is safe to assume that they were not followed. Therefore your home is community property and both parties own equal shares and have equal responsibility and would also have equal liability. Both parties credit would be similarly effected in the case of foreclosure.
Do not expect Rand Rover to have a lot of input in this issue as he practices in New York, I believe, which is not a community property state and he is involved in corporate tax law not individual tax law, very different specialties.
Telling people to ban straight marriage now won’t really garner support for gay marriages. it will just back fire.
Regardless of who’s credit is affected by the foreclosure, if your friend and his girlfriend can’t afford their mortgage now, wouldn’t any mortgage they get in the future also be in constant danger of foreclosure.
Unless your friend got some super bitchin’ job, at which point your situations would be hugely different because I was pretty sure you mentioned going back to school fulltime.
Whoosh
Just a guess but his friend’s old mortgage amount was housing bubble level say $400 thousand dollars. Now that the prices have collapsed he can get just as good a house for say $250 thousand. Much cheaper, lower payments and possibly better interest rates.
Exactly, but to an even greater extent than your example. House prices around here around down unbelievable percentages. My house specifically is down about 68%. Some are more. I could get a pretty decent house now in a good neighborhood for what wouldn’t have bought me a shack in the ghetto from 2005-2007. My friend in the OP bought way out on the outskirts of town - now he’s going to upgrade to a much better location at a much lower price, and we’re going to have to convince a landlord we’re not deadbeats just for the privilege of renting.
I got you. Double Whoosh!
Yep, that won’t work; you gotta show 'em PowerPoint presentations about how much fun anal sex is.
68%! Yowsa. Have you tried renegotiating the mortgage with your bank?
Friends of my sister were forgiven $100k off their loan when their lawyer informed the bank that they were going to file for bankruptcy. The last thing the banks want is a a bunch of overpriced real estate on their hands.
Yeah . . . no offense but do you think we’re fucking idiots? I know that sounds harsh but I’m just frustrated at answering really obvious questions like that. Of course we tried to renegotiate. I said in the OP that this is a last resort after much, among other things, negotiating. We’ve probably filled out enough paperwork and applications to make Moby Dick look like Whistle for Willie. It’s not like we want a foreclosure following us around for the next 7 years. There’s a million problems with our situation that I won’t go into here but one thing that is making this all more complicated is that we have 2 different lenders and one seems to be from Mars while the other is clearly from Venus.
Three months ago they wouldn’t talk to us because we had never so much as made a late payment. We decided we knew how to fix that and now they won’t talk to us because we’re late. It’s enough to make you want to pull your hair out. Our real estate agent seemed to be making a little headway for awhile, but not anymore I don’t think, and we can’t find a lawyer interested in doing anything except organizing a bankruptcy for us. I literally sat down and called maybe 20 or 30 lawyers out of the phone book one day to ask to hire them to write a letter/help negotiate with our lender, and every single one of them either flat out told me no or tried to push bankruptcy services on me instead. I don’t know if they’ve worked out a deal with banks or decided that’s just not worth their time or what.
I don’t even get why the banks would be so stubborn. I mean with you they know what they’re getting, and they’re not gonna the housing bubble price on it. With a renegotiation they could save all sorts of legal troubles that cost money, not risk a potentially vengeful and destructive person trashing the place costing money for repairs and lowering the value even more.
Basically they’re just being bloody mind ‘just because’. So they can cut their nose of to spite their face.
I agree 100%. I’ve paced my livingroom floor ranting about this till I’m red in the face. It’s maddening.
You know the local papers might eat a story like this up. It’s full of the right kind of drama, and it might shame the bank into action. You tried calling up some reporters?
Nah . . . I’m one of hundreds of thousands, and certainly not the worst. My loan wasn’t subprime and it was an ARM but it doesn’t adjust until 2011. Seriously doubt they’re interested.
Don’t take this the wrong way, because I mean nothing negative about it, but you bought a house at peak bubble price in one of the most hosed markets and worked in (and got laid off from) one of the most hosed industries; you’re incredibly damned unlucky, is all. Marital status is a red herring here. You’re essentially the poster child for Fucked America. I’m truly sorry that’s where you are right now. 
I don’t think you’re fucking idiots. Good luck in working out your difficulties.
Bah, I apologize for being rude PunditLisa, it’s just that I’ve been asked that and similar questions by A LOT of people and I wonder what the thought process is that goes into it . . . did you think we haven’t talked to people, read articles, done any research at all? I understand you were probably just trying to be helpful and my frustration was misdirected.
No offense taken. You’re in a rough spot and I wish I could offer up something concrete to help you out.
We needed a correction because real estate prices were getting way out of whack, but I’m sorry that so many innocent people are getting hurt by it.
Ah. Yes. OK.
I’m sure you’ve investigated all angles on this thing, but I think in some community property states property can be converted to separate property by agreement. So, maybe you could make the house your wife’s separate property, and then maybe the loan wouldn’t be on your credit. Just a thought.
Yeah . . . I agree, really. I thought we needed a correction too, until I was convinced that it wasn’t going to happen and bought a house. People said “you’re throwing your money away renting. Real estate is never going down. If you don’t get into the market now, you won’t own property in your lifetime.” Smart, knowledgeable, experienced people. This mess has wiped us out; financially, and even to some extent emotionally, it has devastated us. It has actually hurt our marriage. Not to the point of breaking or anything, but it’s stress-tested the hell out of it. It will take us years and years and years to recover from this, while a lot of people like my friend in the OP who went balls-out in their recklessness won’t feel any effects at all. In fact this is going to benefit him quite a bit. I thought he was stupid because he made less than me, and his girlfriend made less than my wife, but they bought a house for the same price as us and with a shorter rate adjustment period. Look who’s laughing now.