Divorce attorneys are well versed in the practicalities of divorce law and how those laws are currently being interpreted and implemented in their local county court systems.
But, too many divorce attorneys fall short in their knowledge of real estate mortgage financing. That’s unfortunate as there is a big difference between real estate law and the realities of today’s current real estate financing requirements. What was once possible five years ago is no longer even conceivable.
One of the biggest assets that divorcing couples have is their marital home or a marital property or some combination of the two. How those properties are split up between the two parties or sold can be a vexing problem especially when either party operates under a misconception.
One common misconception revolves around the obligations that remain after a Property Settlement Agreement (PSA) is negotiated and executed by all parties. Even if the spouse still living in or controlling the house is said to be responsible for the mortgage and even indemnifies the other against any loss… it won’t matter if you were on the mortgage note. It will be counted against you when applying for a new mortgage until either refinanced or assumed and you are released.
If you sign the Note you are jointly and severally liable for the total amount due.
The situation is all the more complicated when both of the parties are on the title as Tenants by the Entirety and only one of them is obligated on the mortgage note.
While this is not uncommon due to the issue of credit scores, too many divorce attorneys are not familiar with the practice. Most married couples are both on title and also both on any and all mortgage debt as guarantors. Often, each of the parties have signed the Note as banks desire more gurantors. But, that is not always the case. For any number of reasons only one of the parties will have signed the Note and become a guarantor.
The situation I am aware of is that the spouse remaining in the house was refinancing but the other spouse was still on title. Even if the party on title doesn’t sign the note they will still be required to sign the deed of trust, HUD-1 settlement statement and the Right to Cancel.
Some divorce attorneys just don’t get this.
If you are not crystal clear on your responsibilities, rights or obligations you must find out for yourself. It never hurts to ask someone who deals with these issues on a daily basis. Ask a knowledgeable mortgage broker. They’ll make sure you understand or will find someone that will make it understandable for you.