Posted by JohnBoy on September 10, 2005 at 18:11:51:
That would be about it. But with the amount of equity she has she should be able to sell it quick unless she tries to hold out for full market value. If she gets close to losing it she could take a big discount on the price to get it sold quick if need be. In the end, something is better than nothing.
Transfering property after divorce - Posted by Kile
Posted by Kile on September 07, 2005 at 16:14:12:
It was agreed in a divorce settlement that my wife would receive the house we jointly owned by buying me out of my share of the equity. The problem is that after the title had been transferred to her, I remained to be listed on the mortgage and the equity loan. Now my wife’s poor payment habits are destroying my credit rating. Is there a procedure by which the mortgage and the equity loan could also be transferred entirely in her name, since I no longer technically own the property?
Thank you.
Nope, sorry - Posted by John Merchant
Posted by John Merchant on September 07, 2005 at 16:40:59:
In an all encompassing word…NO.
Think about this: You loan Joe Smith $100,000 and he’s personally liable to you. Now Joe wants you to remove him from that note.
Would you want to have somebody else determine that Joe should be released and to just give him the right to walk away from his debt to you ?
Same with your lender. They made YOU the loan, not somebody else, and they have a right to expect you to pay them without your being able to walk away
Re: Nope, sorry - Posted by Kile
Posted by Kile on September 07, 2005 at 23:39:45:
John,
Thank you very much. I appreciate your response.
However, your example seems a bit simplistic to me. If I loaned John $100,000 but it was secured by an asset worth $200,000, which he would forefeit if he walked away, then maybe I would not care very much whether he walked away or not.
In other words, the mortgage is a loan secured by the house, which is now worth a lot more than all the debts secured by it. True, my lawyer had told me that it would be hard to have myself removed from the mortgage and equity loan, but he also told me that if my wife defaulted the bank would foreclose on HER house, so I had nothing to worry about.
If he is correct, then in either case, the bank is not likely to benefit from me being on the mortgage and the equity loan. So the only practical effect of having me on the loans seems to be my wife’s ability to destroy my credit rating.
Also, if you say is so, how could an assets like a house be fairly exchanged for the other assets (so that my kids could stay there)? Suppose a house is worth $500K and the debts are $200K, then it seems fair that a wife would buy the husband out for $150K (which is 1/2 of the remaining equity) and receive the title to the house and assume the debts. But then it seems it would be possible for the wife who now has the house to stop servicing the debts and effectively make the husband pay $200K in debts for HER house?
Thank you for additional clarification.
Regards,
Re: Nope, sorry - Posted by JohnBoy
Posted by JohnBoy on September 08, 2005 at 23:33:47:
“but he also told me that if my wife defaulted the bank would foreclose on HER house, so I had nothing to worry about.”
Your lawyer doesn’t sound to bright! You have a LOT to worry about!
If the bank forecloses, your wife loses HER house, BUT, YOU end up with a foreclosure on your credit and you could lose most or all of your share of the equity in the house as a result.
Your wife doesn’t make the payments. The lender starts foreclosure. Late fees, interest, attorney fees and court costs start adding up quick on the lender’s part. When the property finally gets to the courthouse steps to be auctioned off, the lender has thousands to tens of thousands added to the balance of the loan which they will add to the pay off owed as the minimum bid at auction. Then if someone bids on the property and gets it for the minimum bid amount or slightly higher…bye bye equity!
So in the end your wife loses HER house, but YOU lose all your share of any equity or most of it, and you end up with a foreclosure on your credit along with all the late payments from your wife not making the payments on time.
I don’t know about you or what your lawyer seems to think, but I’d say that is a LOT to worry about!
YOU signed the loan and mortgage, so the bank doesn’t just foreclose on your wife. They also foreclose on YOU to terminate any interest you may have in the property as well. Your divorce settlement grants you half of the equity. So the bank has to foreclose on you as well and since your name is on the mortgage you are affected by the foreclosure showing up on your credit as well as your x-wife being affected.
Also, should the bank end up taking a loss on foreclosure then they will obtain a judgement against you and your x-wife for any amount outstanding that they were not able to collect from foreclosing on the property.
You are still on the loan and liable to the bank no matter what until the loan is paid off in full. It doesn’t matter that you deeded your half to your wife because of a divorce. You remain liable to the lender until the loan is paid off, period!
This is one of the biggest problems involving divorces. Most attorney’s don’t address this problem with their clients. Your attorney should have tried to get the court to order your wife to refinance the property into her own name since you are going to have to deed your interest over to her. If there was a lot of equity involved then that should of have been fairly easy for her to do. Then if she didn’t make the payments it would all be on her and your credit would not be affected by it in any way. Then your only worry would be losing most or all your share of the equity if she lost it to foreclosure.
Now if you would like to have some real satisfaction, form a corp. or LLC and then approach the lender and see if you can buy the note from them. Under the corp’s name of course. Then as the new owner of the note owned by your corp you foreclose on the property for non-payment. Then in the end you get the house back under your corp’s name as the lien holder and after your corp takes the house back you buy the house from your corp. Your wife is out and you are back in!
Divorce lien - Posted by John Merchant
Posted by John Merchant on September 08, 2005 at 08:52:21:
Oftentimes, these days, the divorce judgment gives the W the house during minority of the kids, and gives the H a lien on the house which he can exercise and liquidatable when the kids reach 18.
A friend of mine has a business where she buys these “divorce liens”, as they’re basically just secured promissory notes.
While your credit is at mercy of W, and whether she pays the note or not, be aware that statistics are that she will be wanting to sell the house in just 2 or 3 years so you’ll be given a cashout at that time in all likelihood.
Re: Nope, sorry - Posted by Kile
Posted by Kile on September 10, 2005 at 14:39:25:
John,
Thank you very much for clarification and for your interesting suggestion. I did not give you the whole picture. Actually, I do not have to worry about the equity, because my wife bought me out, i.e. as part of a larger asset settlement she gave me cash for my 1/2 of the house equity, so all of the equity is hers. Also, at the moment the house market value is a few $100K more than the mortgage and equity loan combined. So, it seems to me, that my only real worry is the damage to my credit rating.
As the divorce has not been friendly, it is unrealistic to expect my wife to refinance just because I am asking for it. And given that she missed so many payments that the banks have almost started foreclosure twice it is doubtful that she can refinance even if she wanted to.
So the only question remaining, it seems to me, is there any way to avoid or mitigate the damage to my credit rating?
Thanks.
Another option - Posted by John Merchant
Posted by John Merchant on September 09, 2005 at 11:19:24:
While I agree with JohnBoy, in my experience most courts are going to give the house to the W, right now, without making her refi.
This could leave the H in the lurch where he has to make the payments the W doesn’t.
H’s other option would be to find one of those note/judgment/lien buyers and sell his “divorce lien” right away, for cash discount…then the buyer would have the lien and note to worry about as they wouldn’t be able to collect on the lien unless the note to the bank was paid.
Since I don’t want to put anybody’s ad on here in violation of the rules, I won’t here state the name or ID of the divorce lien buyer I know…but if anybody wants to know and emails me privately I’ll sure give it to them at that time, at no charge.
Re: Nope, sorry - Posted by JohnBoy
Posted by JohnBoy on September 10, 2005 at 15:31:56:
Buy her out to get control of the house. Or get her to come to her senses and sell the thing before she loses all her equity to foreclosure. If the bank forecloses that foreclosure will show up on your credit as well as hers since you are equally liable on the note.
I realize getting her to refinance now, even if she was able, is more than likely not going to happen. That is something you should of had your attorney try to get the court to order her to do at the time of the divorce as part of the settlement.
At this point she needs to be trying to sell it so she can get her equity from it. Meanwhile her equity is getting eaten up with late fees, back payments, interest, attorney fees and court costs. In the end most to all of her equity will be gone if she doesn’t sell or at least get caught up and make the payments on time.
The fact she is ruining your credit is something she may not care about. So you need to get her to focus on the equity she has in the home and she is going to lose it if she doesn’t do something!
If she refuses to get her head out of the sand then look into seeing if the lender would sell the note and buy it yourself. As the note holder you can foreclose on her instead.
Re: Another option - Posted by Chris Butler
Posted by Chris Butler on January 06, 2006 at 18:53:29:
I am looking to sell a divorce lien. If you know of anyone other than Lorali Stevens I would be interested in knowing
Thank you
Re: Nope, sorry - Posted by Kile
Posted by Kile on September 10, 2005 at 15:43:12:
Thanks, John. Unfortunately “getting her to do” anything is just not an option. Nor does she seem to follow a reasonable course of action herself to protect her equity. 
As for your advice to buy the note from the lander, I would not want to be kicking my children who live with her out of the house (even though I realize that if the bank forecloses the end result would be the same) and I don’t have enough money to be able to hold on to the house without living there or being paid rent. So unfortunately, I can’t follow this advice.
Sounds like my only hope is that she will be able to sell the house (it is on the market) before the banks foreclose. Is this basically it?