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Bridging the disconnect between divorce and mortgage lenders

Regarding property division in a divorce proceeding, perhaps no aspect is more emotionally fraught than the issue of the family home. Many happy memories and associations may be tied to a physical space. For a spouse that gives up real property in a divorce, that agreement may come with a sense of loss.

Image, then, how unpleasant it may be to discover that a mortgage lender still views a divorced spouse as jointly liable for a property. This scenario might happen when the spouse’s name has not been removed from the mortgage.

A divorce decree may indicate that a spouse no longer has a legal ownership claim to a property. As a result, the divorce decree may require the other spouse to make mortgage payments. However, any debt tied to that property might still be under both spouses’ names. In the event of late payments or default, the lender may have recourse against all spouses listed on the mortgage — even after the divorce.

Washington, as a community property state, calls for the fair and equitable distribution of property acquired during the marriage. However, simply agreeing to property divisions in a divorce decree without taking the additional steps of contacting creditors or lenders may lead to adverse consequences. Unfortunately, many individuals might be unaware of this possibility.

Fortunately, an attorney that focuses on divorce and property division can help guide a spouse through all of the steps needed to obtain a fair result and comply with applicable laws. From the identification and valuation of marital property, up through the allocation of debts and division of real estate, a divorce attorney can be a helpful resource.

Source: Fox Business, “How to Divide Your House in a Divorce,” July 14, 2014