Nearly 4 years since divorce and my name is still on the home loan - need advice

[chuckb_jr]

Forgive the corss post, wasn't sure if this should be here or in Real Estate...

What is the name of your state (only U.S. law)? Ohio

Not sure that I can explain all of this properly, so bare with me... Purchased the home in 2001, put a lot of work into it, had 3 children and went through a dissolution in November of 2005. My kids are living in the house with their mother and her current boyfriend, so I do not want to force her to sell and put my kids out. In the separation agreement there was a clause that within 6 months she would need to refinance the house and pay me $5k for my share of the equity that went into it with all the work we did. She had a lawyer at the time that did a quick claim deed for her, so I have no rights to the house at all from what I understand... my problem is obviously it's been well over that 6 months, the housing market sucks, the mortgage (from what I've been told) is roughly at $110k, but the value of the property has sunk to about $90k, so no one will refinance her (this after a few years of waiting for her to find a job and get her credit in order before anyone would even consider refinancing her). I know I've been too lenient and I also don't have money to spend on legal wrangling, and honestly I don't want to damage the relationship the ex and I have in regards to the kids... I don't want to jeopardize anything we have established (I see the kids twice a week and every other weekend) but I have to do something about this. I'd like to purchase a house of my own and having a loan out there already isn't helping, not to mention when she misses a payment I take a hit on my credit score... She says she's exhausted all of her options and I'm not sure what to do?

Thanks.
c b j

 

[mistoffolees]

You really don't have many options:

1. She didn't refinance within 6 months, so she's in contempt. You can file to have her held in contempt and force a sale.

2. You can continue to let things go as they are and continue to rent rather than buy.

3. You can ask her to come up with the money to provide enough equity to refinance. It would have to be in the form of gifts from relatives, etc.

4. You can give her enough cash so that she can meet the equity requirements to refinance. This would probably have to be a gift since if it's a loan she might not get the mortgage, anyway.

No easy solutions, though.

 

[LdiJ]

You really don't have many options:

1. She didn't refinance within 6 months, so she's in contempt. You can file to have her held in contempt and force a sale.

2. You can continue to let things go as they are and continue to rent rather than buy.

3. You can ask her to come up with the money to provide enough equity to refinance. It would have to be in the form of gifts from relatives, etc.

4. You can give her enough cash so that she can meet the equity requirements to refinance. This would probably have to be a gift since if it's a loan she might not get the mortgage, anyway.

No easy solutions, though.

The bottom line is that she CANNOT refinance. A judge can punish her for not refinancing but a judge cannot force a lender to give her a loan...nor can a judge force anyone else to provide her the funds to bring the principal down to the point where it can be refinanced.

Therefore, the only other option to get you off the mortgage is a short sale. Unless you are willing/able to make up the shortage, a short sale will do considerable damage to your credit and make it impossible for you to buy a home. You can sue her to heck and beyond for damaging your credit, but that won't change anything or make you able to qualify for a mortgage.

This is basically a no win situation...at least in the short term.

If she has parents with significant financial resources you might be able to put enough pressure on her that they would help her out to keep the home.

Otherwise, the only way to protect your credit is to hope that she will continue to make the payments until the market rebounds enough that a refinance is actually feasible.

 

[mistoffolees]

The bottom line is that she CANNOT refinance.

Most of what you said mirrors what I said. This sentence, however, should probably read "she cannot be FORCED to refinance". If she has enough other resources (or has a family member who will provide additional cash) to bring the LTV to 80%, then she CAN refinance. Whether that is practical or not depends on circumstances.

 

[LdiJ]

Most of what you said mirrors what I said. This sentence, however, should probably read "she cannot be FORCED to refinance". If she has enough other resources (or has a family member who will provide additional cash) to bring the LTV to 80%, then she CAN refinance. Whether that is practical or not depends on circumstances.

No, I meant what I said. At this time, unless she has someone with deep pockets willing to help her, she cannot refinance. A judge could certainly order her to refinance or sell the house.

What I was trying to point out to the OP was that unless she has family with deep pockets that he knows would be willing to shell out 20-30k to bring the principal down, that he does not WANT the judge to make that kind of order. He knows that she cannot refinance and a short sale would do serious damage to his credit.

 

[mistoffolees]

No, I meant what I said. At this time, unless she has someone with deep pockets willing to help her, she cannot refinance. A judge could certainly order her to refinance or sell the house.

Your original statement was as follows:
"The bottom line is that she CANNOT refinance."

Since you have no way of knowing whether she has a rich parent or $500 K in cash in the bank, you can't make that flat statement.

Stating that she can not refinance without putting cash in would be correct, as is your qualification above.