Here's one for all of you armchair (and actual) lawyers

Marionnette · Oct 25, 2016

Divorce and finances.

A and B were married for 14 years when A discovered that B was having an affair. A lawyered up and filed for divorce. B just wanted out of the marriage and didn't get a lawyer. Big mistake on B's part, but that was 9 years ago and it's all water under the bridge now - or is it? A got the house and agreed to pay off all the credit card debt that was disclosed at the time of the divorce. B left with nothing but a car (and A paid the loan on it, handing over the pink slip when it was paid off). B even forfeited any claim to A's 401(k).

A few years later, A modified the mortgage under HARP and got B to finally sign a quit claim deed to the house at that time because the divorce agreement dictated that B should have done so after the divorce. Why this wasn't done when the divorce was finalized, I don't know. A's lawyer left a few loose ends. So, B has no leverage when it comes to the house. The deed is only in A's name. However, B's name is still on the mortgage even though A pays it all. From what I understand, B's signature was not needed for a loan modification? It would have only been required if there was a refi under B's name?

Now B wants A to get their name off of the mortgage because B and the new spouse want to buy a new house and can't get a mortgage while B's name is on the loan. A doesn't want to spend the thousands of dollars it would cost to refi the mortgage, not to mention that the interest rate and terms on the existing mortgage are very favorable and this refinancing would require a home inspection that A isn't confident that the house will pass. There's nothing in the divorce agreement that says A must do this. The bank won't allow B to just remove their name and the mortgage cannot be assumed by A. A thinks that B should pay for the refi costs because it's something B wants and A doesn't benefit from it at all. Not to mention that A doesn't have the money to pay for a refi. B is not being harmed financially (in fact B's credit rating has been helped by A's record of on-time payments). B thinks that A should pay for it because A is the one who "got everything in the divorce". B wants to move on with their life.

So, two questions:

Is A legally bound to pay to refi and remove B's name from the mortgage?
Is A morally bound to do a refi, even though it will cost A a lot of money, both initially and over the life of the new mortgage?

Discuss.

Tinkerdreams · Oct 25, 2016

My opinion is if A does not want to re-fi the house in their name alone, then B should force a sale of the home.

Disney Doll · Oct 25, 2016

No to both, based on what you posted here

gemini2727 · Oct 25, 2016

No way I would agree to that, if I were A. Agree that B should pony up the costs if it only benefits B.

Marionnette · Oct 25, 2016

Tinkerdreams said:
My opinion is if A does not want to re-fi the house in their name alone, then B should force a sale of the home.

Can B do that if they are not on the deed? Forcing a sale nets B nothing other than possibly satisfying the mortgage to release B from financial obligation and it may render A homeless for a while. But it may actually harm B because a quick sale will most certainly net less than what is still owed on the mortgage. Like I said, A is concerned that the house would not pass an inspection by the mortgage company, so it is just as likely to not pass an inspection by the buyer's mortgage company. Since B's name is still on that mortgage, they would be on the hook for half of the deficit and then they would not have the money for the down payment on the new house.

piccolopat · Oct 25, 2016

B can't force a sale if he doesn't own the house. In fact, if A stops paying the mortgage, B is legally responsible to do so and any default will hit his credit report. He should get a lawyer because the title and mortgage for the house should have been changed at the time of the divorce.

cabanafrau · Oct 25, 2016

Divorce settlement agreement is what needs to be adhered to.

Marchand63 · Oct 25, 2016

A is nether legally nor morally bound to do anything. If it is not specified in the divorce decree then A has no duty to refi. As far as morally, I think the minute B stepped out of the marriage to have an affair B abdicated any moral high ground.

BellePrincessBelle · Oct 25, 2016

Are you A or B? Or which one of your kids?
A is in the right regardless.

crispychicky · Oct 25, 2016

Normally, there's a date in the divorce decree by when the spouse who is keeping the home has to have it refinanced to remove the other spouse's name from the mortgage and buy out that spouse's equity. Then, and only then, should the departing spouse sign a quit claim deed - not before. (Although, as OP said, that's all water under the bridge now). B should look at the divorce decree and see if such a date is in it. If there is, then B would have some legal ground to get their name off of the mortgage. If not, then B is out of luck.

If A modified/refinanced(?) through HARP, I'm guessing they must have either been underwater on their mortgage or had very little equity. I wonder if A already looked into it and knows they can't get approved for a refi under A's name only and that's why B's name was never removed?? Just speculation!

Basically, A doesn't owe B anything unless is the divorce decree says A does. That, and holy cow, did B ever need a lawyer during the divorce.

FlightlessDuck · Oct 25, 2016

B got screwed.

:rolleyes1

Marionnette · Oct 25, 2016

BellePrincessBelle said:
Are you A or B? Or which one of your kids?
A is in the right regardless.

I am neither A nor B. I know both of them and I have no dog in this fight but I am not hearing the details from just one of them. I can see both sides of their problem. A doesn't feel that they can refi without it costing a bundle that A doesn't have and B can't get a new mortgage without getting their name off of this one. The two of them have been doing things to make the other's life difficult since the affair was discovered. This is just one more chapter in a long story that would make any soap opera writer proud.

nkereina · Oct 25, 2016

I have no idea about the legalities, but if I were A, I might consider proposing an offer to B. I would request that B pays all costs associated with the refi. I'd also calculate what the difference in interest would be under the refi, if the refi interest rate is higher than the original mortgage's interest rate. I'd then request that B gives me a reasonable lump sum amount to cover the difference in interest. I'd get the agreement in writing and notarized, or even drawn up by a lawyer.

While B might think A got everything in the divorce, that is what B agreed to at the time of the divorce and cannot call foul on it now. B’s time to argue that was during the divorce, when they opted to not get a lawyer. They can’t backtrack now and hang that over A’s head. If this situation were occurring and assets had actually been divided more evenly, I still think B would owe A money for the added interest (assuming there is some) because it will impact A’s current financial situation and change what was agreed upon during the divorce.

Miffy · Oct 25, 2016

There's another solution--well, there are probably a zillion other solutions, but this is the one I thought of just now--that, if I were A, I'd seriously consider:

A signs the deed over to B, for which transfer B would pay the legal expenses, and A walks away. Now the house and the mortgage are B's problem. It seems from what I'm reading here that the house is not really an asset--it wouldn't pass inspection, perhaps it's underwater, etc. A would then find their own house, rent or buy it, and would be free of any legal, semilegal, or potentially legal situations involving B. And A would in fact be free of B altogether, assuming they don't have kids, which may be an incorrect assumption.

GrnMtnMan · Oct 25, 2016

Marionnette said:
From what I understand, B's signature was not needed for a loan modification? It would have only been required if there was a refi under B's name?

This doesn't sound right. I'm surprised the terms of a loan were changed without the consent of both of the borrowers. B might be able to contest the modification. Whoever made the modification might have made a mistake. As someone who has worked in mortgage banking, when B finally gets a lawyer, the lawyer will probably head down this avenue.

Cannot_Wait_4Disney · Oct 25, 2016

Legally, what is in the settlement prevails. Unless it is in the settlement for A to do it, A doesn't have to.

Morally, if it is in the settlement and A hasn't done so yet, then yes A is morally obligated to try and obtain a mortgage in A's name only.
Otherwise it is morally praiseworthy to do so but not morally obligatory.

Although I must say that messing over B in the settlement wasn't morally praiseworthy.

And let this be a lesson to those getting a divorce

I don't know why but people think that somehow creditors must abide by the divorce settlement on who pays what. This is not the case. Creditors are not parties to the settlement, did not agree to the terms and will enforce the original terms of their agreement regardless of who is ordered to pay in the divorce. Hence if your former spouse doesn't keep up their end of the bargain and pay, you're on the hook.

So.
1. If you are not getting the house, make sure you get paid your share of the equity immediately and the person getting the house gets a new mortgage in their name only or if that isn't possible sell the house. Under no circumstances should you agree to quit claim any ownership in a property if your name is still going to be on the mortgage.
2. Make sure all joint credit accounts are closed to any further activity except payment and preferably paid off. Regardless of what your divorce decree or agreement says, even if your spouse is responsible for paying it, well you're on the hook if they don't.
3. Make sure any hospital or doctors you have outstanding bills to pay off or car notes or the like are notified of the divorce and understand that any future bills involving your spouse are not yours to pay. You're still on the hook for the existing ones, however.

smiths02 · Oct 25, 2016

Marionnette said:
Divorce and finances.

A and B were married for 14 years when A discovered that B was having an affair. A lawyered up and filed for divorce. B just wanted out of the marriage and didn't get a lawyer. Big mistake on B's part, but that was 9 years ago and it's all water under the bridge now - or is it? A got the house and agreed to pay off all the credit card debt that was disclosed at the time of the divorce. B left with nothing but a car (and A paid the loan on it, handing over the pink slip when it was paid off). B even forfeited any claim to A's 401(k).

A few years later, A modified the mortgage under HARP and got B to finally sign a quit claim deed to the house at that time because the divorce agreement dictated that B should have done so after the divorce. Why this wasn't done when the divorce was finalized, I don't know. A's lawyer left a few loose ends. So, B has no leverage when it comes to the house. The deed is only in A's name. However, B's name is still on the mortgage even though A pays it all. From what I understand, B's signature was not needed for a loan modification? It would have only been required if there was a refi under B's name?

Now B wants A to get their name off of the mortgage because B and the new spouse want to buy a new house and can't get a mortgage while B's name is on the loan. A doesn't want to spend the thousands of dollars it would cost to refi the mortgage, not to mention that the interest rate and terms on the existing mortgage are very favorable and this refinancing would require a home inspection that A isn't confident that the house will pass. There's nothing in the divorce agreement that says A must do this. The bank won't allow B to just remove their name and the mortgage cannot be assumed by A. A thinks that B should pay for the refi costs because it's something B wants and A doesn't benefit from it at all. Not to mention that A doesn't have the money to pay for a refi. B is not being harmed financially (in fact B's credit rating has been helped by A's record of on-time payments). B thinks that A should pay for it because A is the one who "got everything in the divorce". B wants to move on with their life.

So, two questions:

Is A legally bound to pay to refi and remove B's name from the mortgage?

Is A morally bound to do a refi, even though it will cost A a lot of money, both initially and over the life of the new mortgage?

Discuss.

Not only did B need a lawyer, B should never have signed a quit claim deed while still on the mortgage.

If I were B, I would get a lawyer now and get it figured out.

Also, why can't B get another mortgage? My spouse and I have two mortgages (we rent out one house)

nkereina · Oct 25, 2016

Miffy said:
There's another solution--well, there are probably a zillion other solutions, but this is the one I thought of just now--that, if I were A, I'd seriously consider:

A signs the deed over to B, for which transfer B would pay the legal expenses, and A walks away. Now the house and the mortgage are B's problem. It seems from what I'm reading here that the house is not really an asset--it wouldn't pass inspection, perhaps it's underwater, etc. A would then find their own house, rent or buy it, and would be free of any legal, semilegal, or potentially legal situations involving B. And A would in fact be free of B altogether, assuming they don't have kids, which may be an incorrect assumption.

If A signs over the deed to B, then they have the opposite problem. If I read correctly, I believe A and B are both on the mortgage. Regardless of the deed, the mortgage loan would need to be re-financed into only one of their names in order to release the other one from the financial liability on the loan.

smiths02 said:
Also, why can't B get another mortgage? My spouse and I have two mortgages (we rent out one house)

I don't think it's really that uncommon for people to only be approved for one mortgage, for whatever reason. Perhaps income is low, debt is high, credit score is medicore. There's a whole number of reasons it could be, so that wasn't a surprising point to me.

Poohlove · Oct 25, 2016

Income limitations might prevent them from obtaining a second mortgage.

It seems to me that seeing how B agreed to the divorce decree without thought to the future and now B is the one who wants to make said changes then B should be responsible for the costs associated. I don't know much about mortgages and such but I am unclear how you can even end up named on a mortgage if your name isn't on the deed, but why would you even want that to begin with? Regardless of whether or not A is paying all along if my name and credit are associated with such an arrangement I would want there to be some collateral behind it.

pryncess527 · Oct 25, 2016

Marionnette said:
B just wanted out of the marriage and didn't get a lawyer. Big mistake on B's part, but that was 9 years ago and it's all water under the bridge now - or is it? .

It's sad how often I hear that -- one party wanting out of a marriage so badly they make poor long term decisions as a result.

Marchand63 said:
Nope the mistress did though which is what caused B to think with a well known body part. He was in luurve

No pronouns were used, so I think it's interesting you assumed B was the male

Here's one for all of you armchair (and actual) lawyers

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