Divorce Tip

Was reading in the real estate section about an interesting problem.

A man wrote that he got divorced and his wife got the house in the settlement.

The man is now remarried and he and his new wife want to buy a house. Ain’t gonna happen. Why? Because the house he lost in the first divorce still has his name as co-owner on the mortgage (even though his wife is obligated to make the payments as per settlement.)

According to the advice in the paper, a good lawyer would have noticed this and insisted the guy’s ex-wife re-finance the house in her name alone. Now, unless ex-wife sells or refinances, his name is still on the mortgage and no bank will let him buy another house with another mortgage.

Just thought this might be an interesting tidbit to know, should you or someone you know go through a divorce.

Should be easy to fix by contacting whoever holds the original mortgage. The first wife is presumably in default by not notifying them of her changed circumstances.

Here is the exact quote from last Sunday’s LA Times in the Q&A section:

Question: My divorce was final last year, and I have since re-married. We want to buy a house together. However, I can’t qualify for a mortgage because my name is still on the mortgage to the house my ex-wife received in the divorce settlement. How can I get my name off the mortgage so I can get a new mortgage with my ex wife?

Answer: Forget it. Most mortgage lenders refuse to release borrowers from their obligations even in divorce situations such as you describe where your ex-wife got title to the house.
Unless she refinances the mortgage or sells the house, your name will remain on the existing mortgage obligation although your name is no longer on the home’s title.
If you had a sharp divorce attorney, he or she would have insisted on - as a condition of transferring title to the house to your ex-wife - her refinancing it. Obviously, that didn’t happen, so there is no way now to get your name off the mortgage obligation. Just hope and pray your ex-wife makes the payments on time so she doesn’t ruin your credit."

Then he’s not going to the right bank. If he has income and good credit, he might have some obstacles to get over, but he can still buy a house. Investors do this all the time (owning more then one house).

I don’t think it’s a matter of “not letting him” buy a home. With him still responsible for the mortgage on the previous home, it’s a matter of him qualifying for another home with that debt as part of his ratios.

Lots of people own more than one home - either second homes or investment properties - but they have to have the income to qualify for the additional purchases. It’s not a punitive act on the part of the bank.


This is definately a good tip! My husband’s first wife was on the deed to the house they lived in during their marriage, but not the mortgage (he had bought the house before they were married). They were divorced after less than a year and part of their divorce agreement was that he got the house; and she was supposed to file a quit-claim – I think that’s the term – removing her name from the deed. They had been stationed overseas, and she came back to the US after the divorce, but Kevin never double checked to be sure she’d done the quit-claim (he remained overseas for another couple years, and the house was rented out). We got married about a year and a half after his divorce, and when we moved back to the US, we moved into his house. We still never checked the deed and, because things were busy (2 kids born in 2 years; one of them badly premature) and money was tight, we didn’t get around to putting my name on the deed for 2 years. Then we had to hunt her down through her parents and ask her to follow through with the quit-claim. Kind of a hassle, but it all went through fairly quickly. We sold the house the following year, and it would have caused problems (or at least delays) if we hadn’t discovered all this until the house was moving through escrow.

So, the moral is, make sure all the t’s are crossed when you’re going through a divorce. Especially as regards big things such as home ownership!

Maybe I’m missing something here, but can’t he just get a quitclaim deed and ‘sell’ his wife his legal interest in the property, then send a copy to the mortgage company to have his name removed?

Sure, the lawyer handling the divorce should have made sure the situation was taken care of, but it’s not something that can’t be remedied after the fact.

It may depend on where you are and your credit health.
My husband’s ex, was out of work shortly after the parted ways. (A workers comp thing.) She got the house and was able to make the payments. The problem was, she was unable to refinance, because lenders don’t trust people who haven’t worked in a year.
She wanted hubby to sign a quit claim without her refinancing. That however, only removed his claim to the property, not his responsibility to the mortgage company.
They wrangled over the issue for several months, but in the meantime, he bought the house we now live in. He had no problem whatsoever.
He only had to prove that she had made the payments on time since they separated.
Probably 8 months after we moved in together, she got a job and was able to refi. Then he signed the quit claim.

Because the deed is one thing, the mortgage quite another. The mortgage company doesn’t care if you own the home, they only care that you signed a peice of paper saying you will pay for the home.

Think about it without the divorce. Peggy buys a house. She quit claims it to her friend Laura. Laura isn’t on the mortgage so doesn’t pay - who pays the mortgage?

I did this to my first husband. There was no way when he divorced me I’d have been able to qualify for the mortgage on my own - his choices were to leave the mortgage intact or refinance, pay me maintenance, pay for closing costs, and drive up attorney fees (I wasn’t letting him off the hook easily, and his new girlfirend really needed us to get divorced.)

Also, for future reference, the moment I called up and took my name of his credit cards, the credit card companies called him, closed his accounts and demanded payment in full.

My ex was required to refinance; I was required to file a quit claim: I did, she didn’t and wouldn’t, until I wrote the mortage company and included a copy of the divorce action. She had made all the payments; she just wouldn’t let me off the hook—typical of her.

The guy who wrote that letter and his lawyer are fucking idiots. How people get themselves in situations like that is beyond me. You can have a quit claim and an iron clad separation agreement signed and notarized and the mortgage company isn’t going to give two shits about it. Why should they double their risk by releasing one of the people responsible for the loan?

True story told to me by a friend who is an Air Force JAG. He’s on desk duty and an officer comes in for legal advice. She and her husband owned two homes in the same city. They have approximately the same value and equity. They agree to each take one of the homes and assume payments. The marital separation agreement clearly stipulates that each is totally responsible for the home in which they live and the other is free from all responsiblilty. They wrote up the agreement themselves. :rolleyes:

Ex-husband gets increasingly bitter and eventually stops making mortgage payments, trashes his house beyond repair and moves to his native Australia for good. When the mortgage company, who financed both homes, finds out, they told her that she had to make good on the payments for the other home or they would put a lein on the “good” one.

She kept whining over and over, “but the divorce agreement releases me from obligation.” She was kind of right about that. She could sue her ex-husband and she would win. Unfortunately, he’ll never be back in the country and she’ll never find him.

I’ve always been under the impression that this is why so many couples sell their jointly-owned house and split the proceeds when they divorce. In a lot of ways it’s the simplest thing to do.

You’re correct but it’s a little more subtle in California because of the property tax laws. Without going into too much detail, it’s very beneficial for someone to keep the house if there has been significant appreciation given that the couple can agree on who gets to keep it. In my case, I kept the house and refinanced for a larger mortgage. I paid off the old mortgage and gave the ex her half of the equity. She signed a quit claim and took her name off of the title.

We had the friendliest divorce imaginable and I did most of the paperwork myself. We still invested a few hundred bucks in a lawyer to look over what I had done to make sure that everything was right and few hundred more for a title company to make sure that the house stuff was correct. Money very well spent.

My husband is in the same situation and it hasn’t stopped us from buying a house. He has the statement in his divorce decree saying his former wife is responsible for all payments and repairs on the house. A copy of the decree is part of our mortgage application.

He kept his name on the old house because she couldn’t refinance on her own income and he didn’t want his son to have to move.

It has never been a problem.

My guess here is that your family income is high enough that the two of you were considered to be able to afford both payments if the shit hit the fan or that there is enough equity in the original house to more than cover the loan. Not the same situation. I assure you that if your husband’s ex stopped making payments, her lender would come after him.