Question for divorce/real estate professionals

Discussion in 'The GatorTail Pub' started by malligator, Sep 10, 2013.

  1. malligator
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    malligator Well-Known Member

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    I have a friend going through an amicable divorce right now. The two parties agree on everything, but there's a wrench in the works. My friend is willing to give up claim to the home they own together as long as she is also free of financial and physical responsibility for the house.

    The problem is the only way we know for that to happen is for her soon-to-be ex to refinance the property in his name, but they are underwater so he can't refinance. She could quitclaim so he would have sole control of the house, but she'd still be on the line for the mortgage/taxes/insurance if he didn't pay.

    Is there anything she can do to get away from the responsibility? Again, they are amicable so she's not looking to sue or cause any undue financial burden to either one of them. She just doesn't want a mortgage hanging over her head.
  2. bposs
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    bposs Well-Known Member

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    Being underwater doesn't prevent you from refinancing. HARP was created to let underwater borrowers refinance. The kicker will be if the new lender will allow one borrower to drop off. If the borrower staying in the home is well qualified I don't think it should be an issue.
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  3. Gatormb
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    Gatormb Well-Known Member

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    I'm in the business. Caveat to bp's post. To qualify for HARP the loan must be owned by Fannie or Freddie. Most Conventional fixed rates are.

    If it's an FHA loan he can do a non-qualifying "rollover" after proving he's made six payments on his own, but he cannot increase the loan amount to cover closing costs, which depending on the loan amount can be very low with lender participation.

    PM me if you need more details. Been in the business since 1977.
  4. Gatormb
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    Gatormb Well-Known Member

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    BTW she's smart. Doesn't matter what the divorce decree says she's still responsible down the road. He could have a financial setback years later, lose the house, and her credit will be ruined for three to five years. Even late payments will affect her. Letters of explanation are extinct. All about credit score.
  5. TheGator
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    TheGator Premium Member

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    I am an attorney. There is no way around it, unless the mortgage company is willing to take her name off the loan. My experience says no, but I have heard of exceptions. Mostly depends if the ex is credit worthy.

    The only other option is to short sale and ruin everyone's credit.

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