Love, Support, Advice, and Counsel - A Divorce

Even if settling a divorce doesn't approach the magnitude of the Polskys, the process is nonetheless complicated and sensitive, to say the least.

Next to custody issues, the process of separating assets is often the most delicate, and the family homestead (and other real estate) typically looms largest among these.

There are several options to consider, but let me first point out that most lenders are not bound by divorce decrees regarding the payment of debt. This means that late mortgage (and other) payments will negatively affect credit scores and will, thus, limit the ability of either party to secure future financing.

To make sure at least the current credit situation of each party is maintained, arrangements should be made so that only the person obligated to a creditor is responsible to pay it.

Often, divorcees do not easily agree on how to divide their respective equity in the home, so to avoid having to sell, a negotiation may be made to have one spouse refinance the property and take cash out against it to buy out ownership interest of the other (and potentially cover other settlement considerations). To do this, the lender may agree to a novation. Otherwise, the initial co-borrower may sign a quit claim deed to transfer title, prior to closing on the remortgage.

Many times, selling (or "unpurchasing") the home can be another equitable option. Upon a successful sale, the existing loan(s) would be paid off, and the remaining equity divided.

Obviously, these are just a few of the examples, and with such matters, there are as many important considerations as there are programs available. That is why it is crucial for the legal counsel to work in concert with an astute mortgage (and real estate) professional to design and implement a proper plan that not only meets the pressing concerns of the moment, but the long-term goals of those involved.

Kit Mueller, Mortgage Planner
http://www.kitmueller.com

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