In some cases, the court orders one spouse to refinance the mortgage loan, but that's a difficult stipulation to enforce, points out Brette Sember, a former attorney and divorce expert for WomansDivorce.
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By selling your house for less than what you owe on the mortgage loan, the lender agrees to take a loss and not hold you responsible for paying the difference. But despite being free of mortgage debt, Uncle Sam can still tax you on the amount of the mortgage the lender forgives. To find out where you stand, talk to a tax professional beforehand.
Both you and your spouse should also consult with your attorneys before signing any financial agreement.
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If you are in the middle of a divorce and get behind in making your mortgage payments, applying for loan modification can give you more time to settle your financial affairs. Loan modification could help you avoid foreclosure until the divorce is final and the house is sold or one of you qualifies to refinance the mortgage on your own. Amber Keefer has more than 25 years of experience working in the fields of human services and health care administration.
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Writing professionally since , she has written articles covering business and finance, health, fitness, parenting and senior living issues for both print and online publications. Keefer holds a B. Skip to main content. Sticky Situations A lender can foreclose on a property once the loan goes into default regardless of the circumstances. Loan Modification If you are in the middle of a divorce and get behind in making your mortgage payments, applying for loan modification can give you more time to settle your financial affairs.
Since our divorce, I found out I'm still listed on the mortgage. Even though my ex has been making the payments, I'm worried. Shouldn't the bank have told me that my name was still on the mortgage and how do I protect myself now? Brette's Answer : This is a common problem many people face in a divorce. A court order directing division of the equity of the home in no way affects an outstanding mortgage.
To change the mortgage, there needs to be an assumption, a re-finance, or a sale. There is no other solution. If your husband was ordered to assume the mortgage, it was his responsibility to take care of this. Should he fail to make mortgage payments and if the bank should come after you, your recourse would be to take him back to court to compensate you for what you were forced to pay the mortgage company.
The bank had no responsibility to explain the situation to you - this is why you need a lawyer in a divorce. Can he be required to pay the mortgage until it sells? Lynn's Question : I am going thru a divorce and we are selling our home. My husband says if I leave he won't pay the mortgage payments and he won't move out either.
My name is on the mortgage and I don't want to lose my credit. Is there some form he would have to sign to keep up with the mortgage so I could move out? Brette Answers : You need to get a temporary order from the court about this. While he can be ordered by the court to be responsible for the mortgage payments, if your name is on the loan you will ultimately be responsible in the eyes of the bank. He can be ordered to refinance, but that's hard to enforce. Is it considered taxable income if he makes the mortgage payments?
Sue's Question : I was awarded the family home in our divorce seven years ago. My ex was to pay me each month the mortgage until the home was paid off. In the meantime, I paid off the mortgage from its sale. I have been claiming his payments to me to pay the mortgage as income on my taxes each year If not, can I go back on my taxes and revise them? Brette Answers : Your attorney can help determine if the payments were designated as alimony or property settlement.
For divorces finalized before alimony is taxable; property settlement is not. Good luck. Can I use the excess if he deposits more than the mortgage payment? Donna Asks : My ex-husband and I had a joint checking account, into which he deposited money to pay for the mortgage.
Is this illegal? Brette's Answer : If the court order specifically says the money is to be used just for the mortgage, you would owe him the amount you used for other purposes. Am I liable for half the mortgage payment I'm not on the loan?
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Jill's Question : I am getting a divorce and have moved out of our house. I am on the deed but not on the mortgage. My future ex is threatening me with half the mortgage expense since I moved out 5 months ago we are trying to save money by not using an attorney. He also wants me to pay him half if the house doesn't sell in a timely manner.
Am I responsible for the mortgage both in the past and future? He makes three times as much as I do.
Brette's Answer : In your situation it is unlikely a court would require you to pay half of the mortgage. I know you're trying to save money, however it would be well worth your while to pay an attorney for an hour consultation or two so that you could find out how a court would rule in your case and you can then negotiate from a place of knowledge.
Do I have to reimburse him for half the mortgage payments? Paula's Question : I owned my house and it is in my personal trust. After I married we transferred the mortgage to our bank for easier payoff. My husband never contributed any money toward the payoff. I paid off the entire mortgage myself. How do I prove this is not true?
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And would his accusations hold up in court? Brette's Answer : The problem is that unless you used separate property to pay for it, he may be entitled to this.
If you used marital funds to pay for the mortgage, the increase in equity is likely a marital asset. You need to provide cancelled checks or bank statements that prove the payments came from separate assets money you had at the start of the marriage or which you received by inheritance or other separate property mechanism. Money earned by you during marriage is a marital asset.
Am I liable if the decree states he is responsible for the mortgage? Lorna's Question : In my divorce 3 years ago, I was awarded the house and it said that husband was to make payments and hold wife harmless therefrom. He wants me to refinance the house so I could start paying the mortgage. If he decided to stop paying the payments, would I be held liable? The loan is in both our names. Could the bank come after me even though the decree states that he is the financially responsible one?
Brette's Answer : The bank can come after you, but you in turn could sue him. Be aware that the house can be sold via short sale by the mortgage company if the payments aren't made. And you could be liable for the difference between the sale price and what you owe. What does "husband shall hold the wife harmless and indemnify her from any liability thereon" mean? Pamela's Question : What exactly is meant by "husband shall hold the wife harmless and indemnify her from any liability thereon" when referring to the wife moving out of the marital residence and husband retaining it in the divorce settlement?
Brette's Answer : This phrase usually applies to the mortgage, meaning the spouse who is being told to pay the mortgage is responsible for paying back the other one for any losses if the house is foreclosed on, he doesn't pay it, etc. Am I responsible for the mortgage if he stays in the house? Jennifer's Question : My ex will be staying in the house until it sells. Am I obligated to pay any portion of the mortgage? Brette's Answer: If this went before a court, whether you were required to pay would depend on your and your ex's entire financial circumstances.
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