Upside down mortgage in divorce

[furr14]

What is the name of your state (only U.S. law)? AZ
My husband of 2 1/2 years has a drinking problem. I moved out a couple months ago which prompted him to seek treatment. He was able to convince me to move back in on his word that he realized he had a problem, and he wanted to change and was seeking treatment. As soon as treatment was over, he bagen relapsing....a lot. He's also gotten some anti anxiety and anti depression medication prescribed to him, which he takes in excess, and he acts about as bad as he does when drinking. I'm leaving again. And I plan to begin the divorce process in the next couple weeks.
My main concern is our house and dogs. He purchased the house before we were engaged. He originally purchased it with the intention to flip it, but then everyone knows what happened to the market...so we put a lot into fixing up the house, but we lost a lot of value in the home. When he purchased the home, he didn't have the best credit, so he ended up securing two mortgages, one covers majority of principal and the other is secondary....they are interest only...so in the last 4 years we've been here, no equity has been built, and the house is severely upside down. My name is not on the mortgage or the deed. I am ok with walking away from the house....but then that leaves me with either trying to find an apartment and couping my dogs up there, or leaving the dogs with him to enjoy the backyard. He has always disliked our dogs.
So, if there were a way to modify the loan on the home in light of our situation and reduce the mortgage payment, i would be willing to take the house and let him walk away so long as the debt didn't all weigh on me. Is there a way to do this? Is there any kind of law that allows a bank to reduce the value of the mortgage based on loss of property value and household income? Any suggestions?
I would like to try to avoid the expense of a lawyer if at all possible, as he makes 2x more than i do...and I don't have a bunch of money.What is the name of your state (only U.S. law)?What is the name of your state (only U.S. law)?

 

[LdiJ]

What is the name of your state (only U.S. law)? AZ
My husband of 2 1/2 years has a drinking problem. I moved out a couple months ago which prompted him to seek treatment. He was able to convince me to move back in on his word that he realized he had a problem, and he wanted to change and was seeking treatment. As soon as treatment was over, he bagen relapsing....a lot. He's also gotten some anti anxiety and anti depression medication prescribed to him, which he takes in excess, and he acts about as bad as he does when drinking. I'm leaving again. And I plan to begin the divorce process in the next couple weeks.
My main concern is our house and dogs. He purchased the house before we were engaged. He originally purchased it with the intention to flip it, but then everyone knows what happened to the market...so we put a lot into fixing up the house, but we lost a lot of value in the home. When he purchased the home, he didn't have the best credit, so he ended up securing two mortgages, one covers majority of principal and the other is secondary....they are interest only...so in the last 4 years we've been here, no equity has been built, and the house is severely upside down. My name is not on the mortgage or the deed. I am ok with walking away from the house....but then that leaves me with either trying to find an apartment and couping my dogs up there, or leaving the dogs with him to enjoy the backyard. He has always disliked our dogs.
So, if there were a way to modify the loan on the home in light of our situation and reduce the mortgage payment, i would be willing to take the house and let him walk away so long as the debt didn't all weigh on me. Is there a way to do this? Is there any kind of law that allows a bank to reduce the value of the mortgage based on loss of property value and household income? Any suggestions?
I would like to try to avoid the expense of a lawyer if at all possible, as he makes 2x more than i do...and I don't have a bunch of money.What is the name of your state (only U.S. law)?What is the name of your state (only U.S. law)?

Be smart and walk away from the house. You will never be able to secure financing to put the house in your name, and you would have to do that to keep the house.

Rent a house instead of an apartment so that you have a place for your dogs.

 

[mistoffolees]

Be smart and walk away from the house. You will never be able to secure financing to put the house in your name, and you would have to do that to keep the house.

Rent a house instead of an apartment so that you have a place for your dogs.

I agree. However, if she really wants the house, she could talk to the lenders about a voluntary loan reduction. There is also a government program to assist with situations where loans are far in excess of home value, but I suspect that she's not eligible for that - he might be, but I think it only applies when the homeowners have missed payments (typical messed up government program).

I doubt if either of those things is going to be easy and, frankly, neither one is likely to be preferable to just walking away and buying or renting a different house at today's lower price, but it is an option to consider if she really likes the house.

 

[nextwife]

I agree. However, if she really wants the house, she could talk to the lenders about a voluntary loan reduction. There is also a government program to assist with situations where loans are far in excess of home value, .

Just a clarification, because many people misunderstand this program: Any non Tarp recipient lenders, any banks that originate and service their own loans (non FNMA) are not required to do such modifications. While some may agree to short sales, they will not do principal reductions for parties KEEPING the house.

 

[furr14]

thanks for the advice. it helps a lot.

 

[mistoffolees]

[/B]

Just a clarification, because many people misunderstand this program: Any non Tarp recipient lenders, any banks that originate and service their own loans (non FNMA) are not required to do such modifications. While some may agree to short sales, they will not do principal reductions for parties KEEPING the house.

So if I understand you correctly, it might be a possibility for OP AFTER the divorce (since she's not on the existing loans). Is that right?

 

[furr14]

One more question....since my name is not on the house in any way, and he purchased it before we were engaged, can I be held responsible for it in anyway? Or am I able to walk away from it free and clear?

 

[LdiJ]

One more question....since my name is not on the house in any way, and he purchased it before we were engaged, can I be held responsible for it in anyway? Or am I able to walk away from it free and clear?

You are able to walk away from it, free and clear. About the only exception to that would be if the judge ordered it to be sold as part of the divorce, and decided that you should be liable for a portion of the "short sale". However since everything is only in his name, and the home was purchased prior to your marriage, there would be no reason for a judge to do that.

The home certainly will not impact your credit at all.