property question

[pinkcuda360]

Minnesota

my wife and i seperated a over a year ago, we own a house together with both of us on the mortgage. i assume this makes her half responsible but wanted to make sure. she moved out last december and i have been making all the payments. the house is valued at way less than we owe due to the housing crash. we are now going to go through with the divorce and i am wondering when the house is sold, is she still responsible for coming up with half of the difference if we can't get what we owe for the house?
also, i don't want to do this, but if this really gets ugly, could i go after back mortgage payment money? thanks in advance

 

[nextwife]

All coborrowers are EQUALLY responsible to their lender for payments and for any allowable defiency in the event of a short sale or foreclosure. As someone who works with default borrowers all the time, I can tell you that a divorce decree has no bearing on a lender's prior recourse under their loan documents. The decree only affects what the borrowers agree between themselves as to who will pay, it does not modify the lenders loan agreement. If the lender made the loan to both, both are equally liable.

Personally, I get REALLY tired of people thinking that because they want to walk a way from a relationship they get to walk away on their loan responsibilities. The lender is not a party to the relationship- it is strictly a monetary agreement. "I want to buy this house/refinance and I am agreeing to repay the loan". Nothing in there about ONLY repaying the loan if I still like my coborrower, or only if I can make money on the house or break even.

 

[mistoffolees]

All coborrowers are EQUALLY responsible to their lender for payments and for any allowable defiency in the event of a short sale or foreclosure. As someone who works with default borrowers all the time, I can tell you that a divorce decree has no bearing on a lender's prior recourse under their loan documents. The decree only affects what the borrowers agree between themselves as to who will pay, it does not modify the lenders loan agreement. If the lender made the loan to both, both are equally liable.

Personally, I get REALLY tired of people thinking that because they want to walk a way from a relationship they get to walk away on their loan responsibilities. The lender is not a party to the relationship- it is strictly a monetary agreement. "I want to buy this house/refinance and I am agreeing to repay the loan". Nothing in there about ONLY repaying the loan if I still like my coborrower, or only if I can make money on the house or break even.

That is all absolutely true as far as the mortgage obligation is concerned.

However, there's another issue here - how the divorce court will divide the debt (see below before getting worked up). Since OP was the one staying in the house, the divorce court may order that HE is responsible for the mortgage for the time that he stayed in the house and that stbx will not have to pay her 1/2 of the mortgage for that time.

What that means is that she would still be responsible for ensuring that the mortgage company is paid, even if she has to pay it herself, but then she could sue to recover the money from him. Or, since the house is being sold, but he lived there for the past year instead of her, the court may order him to come up with more of the shortfall.

The mortgage company still needs to get paid, but that doesn't mean that the divorce court can't require one spouse to reimburse the other for part or all of that payment.

 

[pinkcuda360]

how does that work? so if i am able to sell for a profit she would get half of that, but if i sell for a loss she "might not" be liable for the debt? she chose to leave me and moved out, so didn't she walk out on a legal obligation?

 

[mistoffolees]

how does that work? so if i am able to sell for a profit she would get half of that, but if i sell for a loss she "might not" be liable for the debt? she chose to leave me and moved out, so didn't she walk out on a legal obligation?

Please read what I wrote.

In short, you are each entitled to 1/2 the marital equity (the amount that existed at the time that the divorce is finalized) regardless. If there is not enough equity to cover the debt, then you are each responsible for 1/2 of the marital portion of the deficiency. That's all standard.

What is different here is that you are trying to force her to pay half of the mortgage while you get the benefit of the house. Normally, the party who keeps the house is responsible for the mortgage and upkeep. (did you offer to pay 1/2 her rent, utilities, etc when you demanded half of the mortgage? I didn't think so). So, during the time that you had exclusive use of the house, you should be paying for it. Because you effectively got more out of the home ownership than she did (you've been living there since December and she hasn't), the judge could adjust the calculation accordingly.

 

[LdiJ]

Please read what I wrote.

In short, you are each entitled to 1/2 the marital equity (the amount that existed at the time that the divorce is finalized) regardless. If there is not enough equity to cover the debt, then you are each responsible for 1/2 of the marital portion of the deficiency. That's all standard.

What is different here is that you are trying to force her to pay half of the mortgage while you get the benefit of the house. Normally, the party who keeps the house is responsible for the mortgage and upkeep. (did you offer to pay 1/2 her rent, utilities, etc when you demanded half of the mortgage? I didn't think so). So, during the time that you had exclusive use of the house, you should be paying for it. Because you effectively got more out of the home ownership than she did (you've been living there since December and she hasn't), the judge could adjust the calculation accordingly.

Think of it this way...lets use an example. Your mortgage is 1000.00 a month and she rents herself an apartment also costing 1000.00 a month. She also pays 1/2 of the mortgage. She gets absolutely no use of the house therefore ends up spending 1500.00 for housing. You on the other hand have housing for 500.00 a month, because she is paying half of your housing.

Clearly that is inequitable. So, you pay the mortgage because you get exclusive use of the house. Of course, you both could move out and rent the house out, hopefully for enough to cover the mortgage, but that just puts you right back where you are now, although it might buy you time to build enough equity to avoid a short sale.

 

[nextwife]

What is different here is that you are trying to force her to pay half of the mortgage while you get the benefit of the house. Normally, the party who keeps the house is responsible for the mortgage and upkeep. .

Except here is what I often see:

Loan was issued based upon two incomes. Two incomes necessary to support the payments. One spouse decides they want "out" of the relationship and simply bails on the house, moves out, and fails to share responsibility to make sure the payments are made. Loan defaults and the lender's the one burned.

In actuality, the responsible thing would be for both to stay put until they properly dispose of the house.

It is not always the case that the remaining spouse can or should pay the whole mortgage if they did not seek sole occupancy. The spouse that moved out isn't any less responsible just because they, say, move in with a new boyfriend or move in with Mom. As a coborrower, they have a responsibility to see that the payments are fully covered as long as that mortgage remains in place. If I choose to move out of my house, for example, I still have a responsibility to make sure I keep paying my mortgage - It's not my mortgage lender's fault that I chose to move. Many loans simply are not affordable with only one of the two payors. Or with one who did not previously have, say, a CS payment responsibility.

 

[mistoffolees]

Except here is what I often see:

Loan was issued based upon two incomes. Two incomes necessary to support the payments. One spouse decides they want "out" of the relationship and simply bails on the house, moves out, and fails to share responsibility to make sure the payments are made. Loan defaults and the lender's the one burned.

In actuality, the responsible thing would be for both to stay put until they properly dispose of the house.

It is not always the case that the remaining spouse can or should pay the whole mortgage if they did not seek sole occupancy. The spouse that moved out isn't any less responsible just because they, say, move in with a new boyfriend or move in with Mom. As a coborrower, they have a responsibility to see that the payments are fully covered as long as that mortgage remains in place. If I choose to move out of my house, for example, I still have a responsibility to make sure I keep paying my mortgage - It's not my mortgage lender's fault that I chose to move. Many loans simply are not affordable with only one of the two payors. Or with one who did not previously have, say, a CS payment responsibility.

I don't disagree, but they've been separated for a year and he's had the house on his own for 9 months. Why hasn't it been put up for sale if he can't afford it? She clearly doesn't want it, either.

 

[nextwife]

I don't disagree, but they've been separated for a year and he's had the house on his own for 9 months. Why hasn't it been put up for sale if he can't afford it? She clearly doesn't want it, either.

He said it was way upside down - which makes selling hard unless one can make up the shortfall.

 

[pinkcuda360]

i was just curious if i had some leverage if she decided to get nasty about it. i wasn't going to try to get her to pay but i don't want to eat all the debt from the house either when it comes to selling for a loss or having to come up with 20 grand in order to refinance. i am able to afford the house without her but just barely, and since we lived across the street from her parents, i want to sell asap. i was just trying to get an idea of what she is liable for when the paperwork starts to get filled out.

thanks for all your input everyone

 

[LdiJ]

i was just curious if i had some leverage if she decided to get nasty about it. i wasn't going to try to get her to pay but i don't want to eat all the debt from the house either when it comes to selling for a loss or having to come up with 20 grand in order to refinance. i am able to afford the house without her but just barely, and since we lived across the street from her parents, i want to sell asap. i was just trying to get an idea of what she is liable for when the paperwork starts to get filled out.

thanks for all your input everyone

The mortgage company will have to agree to a short sale if you don't have disposable cash to bring to the closing table.