Divorce and House

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

I have a friend who divorced her husband a year ago. He lives in CA and she lives in a house they bought together two years ago in Colorado. The house payments are current and she makes the house payments. Her credit is great and his credit is ok. The condo was purchased for $225K and the last valuation of the property was $175 so they are way under what they owe.

He wants to force a "short-sale" on her, and he can (they are both co-borrowers on the mortgage). Does she have any legal means or options to stop the short-sale besides attempting to get a new loan or refinance from the lender? She has solid credit, but no financial means to obtain a new loan/refi... although she can and does pay the mortgage successfully each month.

Why the ex-husband wants to do this is not understood other than to damage her post divorce.

DavidHT said:

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

I have a friend who divorced her husband a year ago. He lives in CA and she lives in a house they bought together two years ago in Colorado. The house payments are current and she makes the house payments. Her credit is great and his credit is ok. The condo was purchased for $225K and the last valuation of the property was $175 so they are way under what they owe.

He wants to force a "short-sale" on her, and he can (they are both co-borrowers on the mortgage). Does she have any legal means or options to stop the short-sale besides attempting to get a new loan or refinance from the lender? She has solid credit, but no financial means to obtain a new loan/refi... although she can and does pay the mortgage successfully each month.

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The court can and might order a short sale. She has a lot of options to prevent it - but you seem to want to ignore all of them.

DavidHT said:

Why the ex-husband wants to do this is not understood other than to damage her post divorce.

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Or maybe he just doesn't want his credit tied up? Or to own a home jointly with someone he doesn't care to be.

He has every right to get free.

mistoffolees said:

The court can and might order a short sale.

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The bank CANNOT order their lender to agree to a short sale.

nextwife said:

The bank CANNOT order their lender to agree to a short sale.

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I didn't imply that it would.

A short sale is technically any sale where the proceeds do not cover the debt. There are 3 options:

1. The bank accepts the proceeds of the sale and waives the remaining balance
2. The seller(s) bring the deficiency with them to closing
3. The bank accepts the sale and allows the new buyer to take title to the home but the sellers continue to owe the bank the balance.

I'm not suggesting that the bank HAS TO take any particular one of those options, but since the husband is trying to pressure her to take it, it's a good bet that he's worked something out with the bank.

mistoffolees said:

I didn't imply that it would.

A short sale is technically any sale where the proceeds do not cover the debt. There are 3 options:

1. The bank accepts the proceeds of the sale and waives the remaining balance
2. The seller(s) bring the deficiency with them to closing
3. The bank accepts the sale and allows the new buyer to take title to the home but the sellers continue to owe the bank the balance.

I'm not suggesting that the bank HAS TO take any particular one of those options, but since the husband is trying to pressure her to take it, it's a good bet that he's worked something out with the bank.

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While of course its possible that he has worked something out with the bank, the odds of that are not very strong. Its more likely that he does not grasp that the house cannot be sold for what they owe on it, and that therefore his credit is going to take a major hit.

Since OP already stated that his friend does not have the means to cure the deficiency, so that she can refinance, she obviously cannot bring the deficiency to closing either.

Therefore I honestly don't know where this statement comes from:

She has a lot of options to prevent it - but you seem to want to ignore all of them.

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Since you stated she has lots of options, and its already determined the curing the deficiency isn't possible, perhaps you would like to give some examples of what those "lots of options" are.

I find it hard to believe that there was no discussion of the mortgage in the dissolution of marriage. Does her decree state that his name needs to be removed from the house? That would be MY guess as to why he's pushing so hard for her to go for the short sale. I know my divorce decree explicitly stated what was to be done with the home upon finalization of the divorce.