Upside Down Mortgage in Divorce

[CuldesacMom]

What is the name of your state (only U.S. law)? I live in Arizona with my husband. The mortgage for our home is very upside down. My husband suffers from bipolar disorder but refuses treatment, so while he asks for a divorce everytime he cycles into depression, this time it seems like he might go beyond the threat. If he does demand the divorce, what happens to the mortgage if I choose to stay in the house? Would we have to pay down the amount of the mortgage that exceeds the current value of the house to get him off the loan? Bankruptcy is NOT an option for me!

 

[mistoffolees]

What is the name of your state (only U.S. law)? I live in Arizona with my husband. The mortgage for our home is very upside down. My husband suffers from bipolar disorder but refuses treatment, so while he asks for a divorce everytime he cycles into depression, this time it seems like he might go beyond the threat. If he does demand the divorce, what happens to the mortgage if I choose to stay in the house? Would we have to pay down the amount of the mortgage that exceeds the current value of the house to get him off the loan? Bankruptcy is NOT an option for me!

It's actually worse than that. In order to refinance in your name alone, you're going to need to come up with enough cash that the loan will be no more than 80-90% of the value of the home, depending on your credit rating and ability to pay. So you need to come up with enough to pay the under water amount PLUS a 10-20% down payment.

 

[CuldesacMom]

So, if he forces the issue of divorce (maybe he can, I don't know) can I be forced into bankruptcy? Is it possible that a judge and lender would say he isn't able to be removed from the loan? My hope is this may help him to calm down and think about his future when he is healthier.

 

[LdiJ]

So, if he forces the issue of divorce (maybe he can, I don't know) can I be forced into bankruptcy? Is it possible that a judge and lender would say he isn't able to be removed from the loan? My hope is this may help him to calm down and think about his future when he is healthier.

If the loan cannot be refinanced, then he cannot be removed from the mortgage, period.

You cannot be forced into bankruptcy, but you could possibly for forced into a short sale...which would do almost as much credit damage as a foreclosure.

 

[mistoffolees]

If the loan cannot be refinanced, then he cannot be removed from the mortgage, period.

You cannot be forced into bankruptcy, but you could possibly for forced into a short sale...which would do almost as much credit damage as a foreclosure.

But HE will be harmed, too, so he has an incentive to come up with some reasonable solution where they both come out OK. They may just have to keep the house and keep making payments for a while until there's enough equity to sell it and break even.

 

[Ohiogal]

The economic stimulus package MIGHT provide some help for her.

 

[LdiJ]

The economic stimulus package MIGHT provide some help for her.

It could. I wish they would get more specific information/details published on exactly how that is supposed to work.

 

[Ohiogal]

It could. I wish they would get more specific information/details published on exactly how that is supposed to work.

I have not seen full details anywhere.

 

[LdiJ]

I have not seen full details anywhere.

No one has...its irritating as heck because normally those of us in my profession have access to those kinds of details quickly. Its not happening this time.