Property issue - joint mortgage

[JohnPSL]

What is the name of your state (only U.S. law)? Texas
We obtained our divorce approximately four years ago. As part of the settlement, a Special Warranty Deed was executed transferring/conveying my spouse's interest in our house, which we had previously owned and financed jointly, exclusively to me.This was filed at the County Offices as required. Under the terms of our divorce, I have accepted full obligation for anything to do with the house, including payment of the mortgage, although her name remains on the mortgage loan. She is now concerned about her credit if I default, and I suspect she is finding her credit is fully committed due to the old mortgage.

My spouse has now been pressing me to either refinance to get her name off the loan, or fully assume the loan with the mortgage company. I might sell the property within several years, hence refinancing is not a good proposition for me. I don't think a loan assumption helps anybody achieve their objective.

She now has come up with a "Deed of Trust to Secure Assumption", with the explanation that it will secure my ownership of the property - she is claiming she has been told that although her name is not on the deed (anymore), I am not necessarily the sole owner. The way I see it, I am the sole owner, but if I signed this Deed of Trust, she could repossess if I defaulted - so, my question is , why would I want to agree to execute this Deed of Trust. Am I missing something? If this was to be an issue, should not her attorney have advised her to require this as part of the divorce agreement?

I much appreciate any advice that may be out there. Thank you.What is the name of your state (only U.S. law)?

 

[LdiJ]

What is the name of your state (only U.S. law)? Texas
We obtained our divorce approximately four years ago. As part of the settlement, a Special Warranty Deed was executed transferring/conveying my spouse's interest in our house, which we had previously owned and financed jointly, exclusively to me.This was filed at the County Offices as required. Under the terms of our divorce, I have accepted full obligation for anything to do with the house, including payment of the mortgage, although her name remains on the mortgage loan. She is now concerned about her credit if I default, and I suspect she is finding her credit is fully committed due to the old mortgage.

My spouse has now been pressing me to either refinance to get her name off the loan, or fully assume the loan with the mortgage company. I might sell the property within several years, hence refinancing is not a good proposition for me. I don't think a loan assumption helps anybody achieve their objective.

She now has come up with a "Deed of Trust to Secure Assumption", with the explanation that it will secure my ownership of the property - she is claiming she has been told that although her name is not on the deed (anymore), I am not necessarily the sole owner. The way I see it, I am the sole owner, but if I signed this Deed of Trust, she could repossess if I defaulted - so, my question is , why would I want to agree to execute this Deed of Trust. Am I missing something? If this was to be an issue, should not her attorney have advised her to require this as part of the divorce agreement?

I much appreciate any advice that may be out there. Thank you.What is the name of your state (only U.S. law)?

So, you think that you have the right to tie up her credit indefinitely? You think its perfectly acceptable to do so? Are you certain that your divorce decree does not require you to refinance?

The decent thing to do would be to refinance the mortgage whether you consider that to be a "good proposition" or not.

However, as far as the Deed of Trust is concerned, if you default, the bank is certainly going to foreclose on you....why shouldn't you give the person whose credit you are tying up, (capriciously I might add) the opportunity to repossess and possibly save their credit, and yours, rather than tanking both?

If I were her, I would be taking you back to court to try to get the judge to order you to refinance if you didn't cooperate with doing so.

 

[mistoffolees]

So, you think that you have the right to tie up her credit indefinitely? You think its perfectly acceptable to do so? Are you certain that your divorce decree does not require you to refinance?

The decent thing to do would be to refinance the mortgage whether you consider that to be a "good proposition" or not.

However, as far as the Deed of Trust is concerned, if you default, the bank is certainly going to foreclose on you....why shouldn't you give the person whose credit you are tying up, (capriciously I might add) the opportunity to repossess and possibly save their credit, and yours, rather than tanking both?

If I were her, I would be taking you back to court to try to get the judge to order you to refinance if you didn't cooperate with doing so.

On what basis? The court made its order and he has apparently done everything the court ordered him to. There's no mention of the loan being in default, so he's met his obligations.

Why would the court allow her to come back several years later and impose new requirements on him simply because she's getting paranoid?

I would absolutely refuse to sign anything. I would CONSIDER refinancing only if she agreed to pay all the costs associated with it and only if the interest rate were no higher than on the original loan. I would consider signing the deed of trust if she pays my legal expenses to evaluate it and discuss the options.

He has absolutely nothing to gain by doing her favors and a lot to lose (refinancing can costs thousands of dollars).

It's not about being a nice guy. It's about not expecting the guy to take on additional obligations years after the divorce to satisfy his ex-wife's whims.

And to the OP, don't rely on an ex for legal advice. You are the sole owner, although the bank has certain rights, as well. Your ex has no ownership. If you default and the bank comes after her for the money, she can sue you for the money, but that doesn't mean she owns the hom.

 

[LdiJ]

On what basis? The court made its order and he has apparently done everything the court ordered him to. There's no mention of the loan being in default, so he's met his obligations.

Why would the court allow her to come back several years later and impose new requirements on him simply because she's getting paranoid?

I would absolutely refuse to sign anything. I would CONSIDER refinancing only if she agreed to pay all the costs associated with it and only if the interest rate were no higher than on the original loan. I would consider signing the deed of trust if she pays my legal expenses to evaluate it and discuss the options.

He has absolutely nothing to gain by doing her favors and a lot to lose (refinancing can costs thousands of dollars).

It's not about being a nice guy. It's about not expecting the guy to take on additional obligations years after the divorce to satisfy his ex-wife's whims.

And to the OP, don't rely on an ex for legal advice. You are the sole owner, although the bank has certain rights, as well. Your ex has no ownership. If you default and the bank comes after her for the money, she can sue you for the money, but that doesn't mean she owns the hom.

He is tying up her credit. A judge may or may not order him to refinance at this point, but it can and has happened. We also don't know that his orders do not require him to refinance.

 

[JohnPSL]

I have reviewed my papers; there is no refinance requirement, and I continue to fulfil the obligations of my divorce agreement and have no intentions not to. I am not on a guilt trip about this.

I do understand my spouse's concerns, but they are not of my making and I have not intentionally or otherwise placed any hurdles in her way. The best way out for everyone is if I sell the home - but until my son & daughter are out of college, I am not planning on that.

So, we are back to refinancing. Refinancing would not be a viable option to anyone planning to sell within 2-3 years - just not an economic proposal; why would I want to incur that expense for the short term. Futher, I certainly would not wish to increase the remaining term of the mortgage, the rate or the monthly payment. Now, if she would pay the expenses of refinancing, subject to the criteria just noted - that would strike me as reasonable. Whether that is achievable or not, I do not know, but that would be her choice if she wishes to pursue it.

So, I believe what you are all saying is that the Deed of Assumption of Security Interest would not be in my interests.

 

[mistoffolees]

He is tying up her credit. A judge may or may not order him to refinance at this point, but it can and has happened. We also don't know that his orders do not require him to refinance.

If the orders require him to refinance, he would be in contempt. But if they don't (and it doesn't appear that they do), then the fact that her credit tied up is something she should have addressed at the time of the divorce. She has no grounds to go back to court to try to change it later. And he shouldn't have to bear the cost of refinancing.

 

[LdiJ]

I have reviewed my papers; there is no refinance requirement, and I continue to fulfil the obligations of my divorce agreement and have no intentions not to. I am not on a guilt trip about this.

I do understand my spouse's concerns, but they are not of my making and I have not intentionally or otherwise placed any hurdles in her way. The best way out for everyone is if I sell the home - but until my son & daughter are out of college, I am not planning on that.

So, we are back to refinancing. Refinancing would not be a viable option to anyone planning to sell within 2-3 years - just not an economic proposal; why would I want to incur that expense for the short term. Futher, I certainly would not wish to increase the remaining term of the mortgage, the rate or the monthly payment. Now, if she would pay the expenses of refinancing, subject to the criteria just noted - that would strike me as reasonable. Whether that is achievable or not, I do not know, but that would be her choice if she wishes to pursue it.

So, I believe what you are all saying is that the Deed of Assumption of Security Interest would not be in my interests.[/QUOTE]

I didn't actually comment on that. It would depend exactly on what it said. There would be no specific advantage to you signing it, (other than perhaps politically, with your ex) but depending on what it said, it might be harmless to you. You should not even remotely consider signing it until you have run the actual document by a local attorney.

I also think that you should consult a local attorney regarding whether or not its feasible for her to bring forth a suit attempting to require you to refinance.

 

[JohnPSL]

I have not yet seen the Deed of Assumption for Security Interest my wife has raised. From what I have researched, it would if executed, give her the right to make good any default on my part and provide her the ability to claim the property in default, as under the Deed of Assumption the property becomes the security for her share. Thereafter she could evict me and do what she wanted with the property.

I guess her current situation is that the bank could demand payment from her, but she has no title interest in the property. I have to imagine that this is not an uncommon situation that people get into, and while you can say she should have thought of this at the time of divorce - surely, any attorney practicing in divorce law should know the potential trap of this type of situation and offer the appropriate advice.

I noticed there was another post on this site concerning the same issue from a different perspective - again, that spouse's issue could have been avoided with the right advise at the time of the divorce.

 

[LdiJ]

I have not yet seen the Deed of Assumption for Security Interest my wife has raised. From what I have researched, it would if executed, give her the right to make good any default on my part and provide her the ability to claim the property in default, as under the Deed of Assumption the property becomes the security for her share. Thereafter she could evict me and do what she wanted with the property.

I guess her current situation is that the bank could demand payment from her, but she has no title interest in the property. I have to imagine that this is not an uncommon situation that people get into, and while you can say she should have thought of this at the time of divorce - surely, any attorney practicing in divorce law should know the potential trap of this type of situation and offer the appropriate advice.

I noticed there was another post on this site concerning the same issue from a different perspective - again, that spouse's issue could have been avoided with the right advise at the time of the divorce.

The bank could demand the full amount of the mortgage from her....and will if you default.

Let me give you a more specific example:

You lose your job, can't find another and end up having to file bankruptcy. You walk away from the house and the bank takes possession and it sells for 20k less than the principal balance of the mortgage.

You are protected because you filed bankruptcy. She is not. She is on the hook for the entire 20k balance. However, if she had the option to take over possession of the house, and cured the difficiency with the mortgage, and then sold the house for at least the principal balance, then her damages would be mitigated.

 

[JohnPSL]

The bank could demand the full amount of the mortgage from her....and will if you default.

Let me give you a more specific example:

You lose your job, can't find another and end up having to file bankruptcy. You walk away from the house and the bank takes possession and it sells for 20k less than the principal balance of the mortgage.

You are protected because you filed bankruptcy. She is not. She is on the hook for the entire 20k balance. However, if she had the option to take over possession of the house, and cured the difficiency with the mortgage, and then sold the house for at least the principal balance, then her damages would be mitigated.

OK. I understand your point, which well-understood, and I appreciate your input, except I sense you seem to feel I am trying to get the better of my spouse. I have looked after our children since the divorce, finished up their high-school, and now helping them through college. My spouse has not provided for them in almost any respect since the divorce; does not even visit with them regularly. I don't think it is unreasonable to expect her to pick up the cost of protecting her own financial situation if that is what she wants to do - why it should suddenly be my responsibility after 4 years of divorce begs a question or two.

 

[Farfalla]

…… As part of the settlement, a Special Warranty Deed was executed transferring/conveying my spouse's interest in our house, which we had previously owned and financed jointly, exclusively to me. This was filed at the County Offices as required. Under the terms of our divorce, I have accepted full obligation for anything to do with the house, including payment of the mortgage, although her name remains on the mortgage loan. She is now concerned about her credit if I default, and I suspect she is finding her credit is fully committed due to the old mortgage.

Here you say that your divorce states that you are supposed to take full responsibility for anything to do with the house. The way I read it, and probably the way your ex took that is that you were supposed to get her off the mortgage.

What harm would it do to you to see if the mortgage company would take her off the mortgage?

I also don’t see what harm it would do for you to sign the "Deed of Trust to Secure Assumption" if you cannot take her off the mortgage.

If I were she, since the divorce papers say that you are take full responsibility for the house I’d take you back to court at this point.

She had some pretty bad representation if her attorney had her sign over the house and did not ensure that she was taken off the mortgage.

 

[mistoffolees]

Here you say that your divorce states that you are supposed to take full responsibility for anything to do with the house. The way I read it, and probably the way your ex took that is that you were supposed to get her off the mortgage.

What harm would it do to you to see if the mortgage company would take her off the mortgage?

I also don’t see what harm it would do for you to sign the "Deed of Trust to Secure Assumption" if you cannot take her off the mortgage.

If I were she, since the divorce papers say that you are take full responsibility for the house I’d take you back to court at this point.

She had some pretty bad representation if her attorney had her sign over the house and did not ensure that she was taken off the mortgage.

That's a terrible assumption. In my case, I have plenty of assets to pay off the mortgage if I default. My ex signed a quit claim deed, but she remained on the mortgage. There's little or no risk to her in doing so since I have plenty of other assets. Further, the mortgage is about half of the home value, so even if I quit paying, the bank could easily sell the house for more than enough to pay the mortgage.

I don't have any idea what the OPs situation is, but saying that any attorney who doesn't insist on refinancing is a bad attorney is very, very bad advice.

It's also very bad advice for you to suggest that he should sign a form which you haven't read and which serves some unknown purpose. Perhaps it's harmless. OTOH, perhaps it says she can take over the house and all its equity if he is 1 day late on making a single payment. You just don't know, so you shouldn't be advising him to sign it.

As for the rest, I've never seen any papers which say person A is to take 'full responsibility' for the house. They are almost always phrased far more precisely than that: "person A will take possession of the house and person B will sign a quit claim" or "person A is required to refinance the home to take person B off the mortgage". It sounds as though the OP has met all of his obligations under the mortgage and there's no reason he should be forced to pay to refinance since the issue was settled 4 years ago and there's no obvious change in circumstances.

 

[LdiJ]

Neither your ex, nor op's ex will be able to obtain a mortgage as long as their credit is tied up in your mortgages. Neither of you may think that's taking advantage of your ex, however it really is. Its tying up their credit, for your financial convenience.

I could have done exactly the same to my ex, because our decree didn't order me to refinance the house, but I considered myself obligated to do so.

 

[mistoffolees]

Neither your ex, nor op's ex will be able to obtain a mortgage as long as their credit is tied up in your mortgages. Neither of you may think that's taking advantage of your ex, however it really is. Its tying up their credit, for your financial convenience.

That is not correct. My ex was easily able to obtain a mortgage even though her name is still on mine.

One size fits all answers are generally bad advice.

Furthermore, if his ex wanted to apply for a mortgage or wanted her name off the mortgage, it should have been negotiated at the time of the divorce, not 4 years later. He might easily have asked her for the cost of refinancing, for example.

This reminds me of my ex's approach. We spent a lot of money negotiating a 'final' settlement. Every few months, she comes back asking for something else. Maybe a few hundred dollars here, a couple thousand there, and so on. Sorry, but it's too late. Final means final.

If she had asked for it at the time of the divorce, it's one thing. But coming back 4 years later and asking OP to spend significant amounts of money for her benefit isn't appropriate. If she really wants her name off the mortgage, she should pay his costs.

 

[LdiJ]

That is not correct. My ex was easily able to obtain a mortgage even though her name is still on mine.

One size fits all answers are generally bad advice.

Furthermore, if his ex wanted to apply for a mortgage or wanted her name off the mortgage, it should have been negotiated at the time of the divorce, not 4 years later. He might easily have asked her for the cost of refinancing, for example.

This reminds me of my ex's approach. We spent a lot of money negotiating a 'final' settlement. Every few months, she comes back asking for something else. Maybe a few hundred dollars here, a couple thousand there, and so on. Sorry, but it's too late. Final means final.

If she had asked for it at the time of the divorce, it's one thing. But coming back 4 years later and asking OP to spend significant amounts of money for her benefit isn't appropriate. If she really wants her name off the mortgage, she should pay his costs.

We will just have to agree to disagree about this one. I personally made the choice to refinance when I was not required to do so, because I felt obligated to do so. In your case, since your wife was able to easily qualify for a mortgage without her name being removed from yours, its a "no harm, no foul" situation. However, situations like those are fairly rare.