House Refi after divorce

[thecapt]

What is the name of your state (only U.S. law)? IL
per divorce decree I had 12 months to refi my house to remove my ex's name from it. We had 2 mortgages and I didn't have a problem with the first getting refi but the bank wont touch the second because the house is underwater. My ex keeps bugging me about it and is threatening legal action if I don't refi it. I've tried every option and can't get her name removed from the second at least until I pay it down more and hope that home prices rise. Does she have a leg to stand on? Can a court order anything since it's out of my control? Any info or advice would be appreciated.
Thank you

 

[tranquility]

You've probably got to go to court to get a modification of the order as you will not be able to comply. No bank would take a second position when there is not enough value to cover it. The court may very well require you to sell the property as it is unfair to keep ex on the line and his credit tied up for more than is reasonable. A year seems reasonable. You might look into HARP. But, you need the modification. If you make her have to get the order for your violation, the court is less likely to see if it can accept other possibilities.

 

[ecmst12]

You could in theory be held in contempt. Do the best you can to get her name off things as soon as possible. Her displeasure is understandable.

 

[Zigner]

You've probably got to go to court to get a modification of the order as you will not be able to comply. No bank would take a second position when there is not enough value to cover it. The court may very well require you to sell the property as it is unfair to keep ex on the line and HER credit tied up for more than is reasonable. A year seems reasonable. You might look into HARP. But, you need the modification. If you make him have to get the order for your violation, the court is less likely to see if it can accept other possibilities.

Fixed it for ya!

 

[nextwife]

Jr

You've probably got to go to court to get a modification of the order as you will not be able to comply. No bank would take a second position when there is not enough value to cover it. The court may very well require you to sell the property as it is unfair to keep ex on the line and his credit tied up for more than is reasonable. A year seems reasonable. You might look into HARP. But, you need the modification. If you make her have to get the order for your violation, the court is less likely to see if it can accept other possibilities.

A court cannot require the second mortgage to agree to a short payoff, and HARP is ONLY do-able if the Jr Mtg buys and sells their loans through Fannie/Freddie. There are MANY lenders are not obligated to do HARP mods.

A sale is indeed possible if one or both parties contribute the shortfall.

 

[wavehopper27]

The FHA has a program that will allow the re finance of underwater mortgages, provided that you have an FHA mortgage currently.

 

[Ohiogal]

Jr

A court cannot require the second mortgage to agree to a short payoff, and HARP is ONLY do-able if the Jr Mtg buys and sells their loans through Fannie/Freddie. There are MANY lenders are not obligated to do HARP mods.

A sale is indeed possible if one or both parties contribute the shortfall.

The court cannot require the second mortgage to agree to a short payoff, but they can require OP to either come up with the shortfall or put the house on the market immediately listed at market value or a price geared to sell quickly. OP can be found in contempt because he is tying up his ex's credit and if he is late on a SINGLE payment that can harm her credit report.

 

[nextwife]

The court cannot require the second mortgage to agree to a short payoff, but they can require OP to either come up with the shortfall or put the house on the market immediately listed at market value or a price geared to sell quickly. OP can be found in contempt because he is tying up his ex's credit and if he is late on a SINGLE payment that can harm her credit report.

Yeah, I've had several such so ordered short sales hit my desk, at which point we, the lender, may review it and say NO WAY, we aren't taking this hit, short sale denied. Especially if the borrower has sufficient income to continue making the payments. Unless the borrowers actually have the money to pay the shortfall, making such an order tries to place the financial loss reponsibility on a third party.

IF the borrowers do not have funds available available from which they CAN pay the shortfall, the mortgage lender does NOT necessarilly have to agree for it to be sold short and they take a loss so that the divorced spouse can walk away from their loan.

"A price to sell quickly" may be contrary to the banks' short sale approval policies. They may specifically require evidence of significant efforts to sell higher, with smaller incrimental reductions and evidence it could not sell at any of the previous higher prices. I had one "ordered priced to sell quickly" that came in way below what our third party valuation showed they could get, and these orders can be a waste of everyone's time, because the lender won't approve it.

 

[Bali Hai]

You could in theory be held in contempt. Do the best you can to get her name off things as soon as possible. Her displeasure is understandable.

So is his.

 

[OHRoadwarrior]

It makes one wonder if this disparity was accounted for in the equitable distribution of assets.

 

[thecapt]

If a sale was forced at market value a balance would remain and would still be in the same position. If this was the case, I would be better default and save the money. Any other idea's.

 

[OHRoadwarrior]

If a sale was forced at market value a balance would remain and would still be in the same position. If this was the case, I would be better default and save the money. Any other idea's.

Why was this issue not addressed in the divorce, or was it and you only want to segment this portion of the issue?

 

[nextwife]

If a sale was forced at market value a balance would remain and would still be in the same position.

EXACTLY! An "order" to refinance or sell short to parties who have no availability of funds to pay the shortfall, is an order that is issued with the expectation that a third party will be agreeable to taking a loss just to make the couple's financial seperation easier for them. It is an order that is impossible to comply with unless a third party is financially injured.

ANY order that requires a short payoff (because if the parties were able to make up the shortfall, it would not be a short sale) is an order given with the expectation that a third party will be financially impacted.

 

[tranquility]

If a sale was forced at market value a balance would remain and would still be in the same position. If this was the case, I would be better default and save the money. Any other idea's.

Except for the fact it would be a violation of the court's order. Go to the court and get a modification. It is the only way this might unwind without you taking the hit.

 

[LdiJ]

The court cannot require the second mortgage to agree to a short payoff, but they can require OP to either come up with the shortfall or put the house on the market immediately listed at market value or a price geared to sell quickly. OP can be found in contempt because he is tying up his ex's credit and if he is late on a SINGLE payment that can harm her credit report.

The problem is that a short sale does far more to damage her credit then a late payment here or there. If I were in your shoes I would ask for a face to face meeting with the ex, to lay everything out on the table, how it would effect each of your credits scores, and give her some input into the decision making process.

I think about these things differently than many others do. If I felt that my ex was a financially responsible person I would be more concerned with protecting my credit over the long haul, than getting something out of my name as fast as possible.

In this case, unless you have liquid or easily liquidated assets available to pay up any shortage on your mortgage, there is little to nothing that you can do to immediately get her name off the loan, without putting both of your credit scores at serious risk. This is something that your ex probably does not understand. She is probably one of those people who thinks that a judge can order anything and even people or institutions who are not parties to the case would have to comply.

So, this really is a case of sitting down and talking with her, perhaps even with another member of her family present who does understand those kinds of financial/credit issues so that the two of you can decide what to do.