Divorced but still Married to your Spouse’s Mortgage

Chris Muellenbach  |  June 27, 2022

Sandra and her fiancé found their dream home.    
 
They didn’t plan to buy a home together until after the wedding, but this was the perfect house.
 
They called their bank to begin the pre-approval process for a home loan to submit an offer on the house.
 
To Sandra’s shock, there was an active mortgage on her credit report. Not only did the mortgage reduce the amount of money she qualified for, but the payments were also approaching 90 days overdue.
 
The late payments had such a negative impact on Sandra’s credit score, it was going to be nearly impossible for her to qualify for a new home loan anytime soon.
 
How did this happen? Sandra had been married and divorced her previous spouse Bob in 2018.
In the divorce negotiations, Sandra agreed to allow Bob to keep the house. Sandra signed a quitclaim deed removing her name from the title and ownership of the house.
 
The problem: a quitclaim deed can quickly remove you from the home’s title and terminates ownership, but it doesn’t absolve you from the mortgage.
 
Talk to your attorney, but prior to signing the quitclaim deed, it is in both parties’ best interest to get the mortgage and any liens transferred into one person’s name, usually by refinancing.
When a quitclaim deed results from a court order, the judge will often include instructions for refinancing the property and handling all outstanding debts.
 
Divorces are stressful. Child custody/support, maintenance/alimony, division of assets, and other issues often take up a great deal of time, expense, and emotional energy for the spouses and attorneys.
 
By the end, everyone wants the judgement of divorce to be finalized.
 
If there is no court order, refinancing can easily be overlooked.
 
My take:
 
The job of a family law attorney is complex, having a Certified Divorce Real Estate Expert™ on your team of divorce professionals, will reduce the attorney workload by allowing me to focus on the real estate, often the largest asset divorcing spouses have.
 
Think of me as the aspirin to the real estate headache many family law attorneys don’t realize they have.
 

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