How to Afford Your Mortgage After Divorce

by Paige from IN, by Dawn in MD, by Sandy in CT, and by Carin in CA

Ask Kate how to afford your mortgage after divorce: Paige is proactively pursuing a HAMP modification after her divorce. Yet she is finding her previous HARP refinance has become a roadblock. I may have another solution, the Hardest Hit Funds Program.



Dawn wants her ex-husband's name off the mortgage. I propose a loan assumption. Unemployed and recently divorced Sandy has accepted that she must sell her house to free herself from the mortgage obligation. Besides HAFA foreclosure alternatives, I describe the HAUP Mortgage Forbearance Program for unemployed and underemployed homeowners.

No HAMP Modification After HARP Refinance

By Paige in Indianapolis, IN
Divorce and No HAMP  Modification after HARP Refinance

Kate,

I'm struggling financially due to the job market and new child support law.

I am a single mother due to domestic violence. I had to leave my marriage and career in 2001.

I've applied for the HAMP as a proactive measure as I am going to run out of cash. In addition to this, I am trying to get a better job and looking for a second job.

But I was denied because the origination date was 2012 when I refinanced under HARP. I had inquired about refinancing and did not know I was being directed into the HARP program.

It doesn't make sense at all to me as I am trying to be financially proactive.

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: No HAMP Modification after HARP Refinance

Hi Paige,

I doubt you are being denied a HAMP modification strictly because you refinanced in 2012 using the HARP Program. According to the HAMP eligibility rules, any refinance - regardless of the program - would have caused this same issue.

Making Home Affordable's HAMP Modifications

Here's the guideline that explains...
You may be eligible for HAMP if you meet the following criteria: You obtained your mortgage on or before January 1, 2009.
So short and simple, because your current mortgage was originated after 2009, you're most likely not going to be offered a HAMP modification.

Read more about HAMP mortgage modifications here.

In-House Modification Programs

So what are your options? Some lenders offer in-house modification programs in addition to Making Home Affordable's HAMP.

But don't wait for it to be handed to you. Call your lender or loan servicer today. Ask if they offer an in-house loan modification program that would include your mortgage which was originated in 2012.

Hardest Hit Funds Principal Reductions

Aside from modifying your mortgage, you may be eligible for the Hardest Hit Funds Program. You will be pleased to know that a homeowner does not have to go through Making Home Affordable Program to be eligible for the funds.

Go to Hardest Hit Funds for Principal Reductions to learn more.

Best wishes for a bright future,

Ask Kate

HAMP Loan Modification After Divorce

By Dawn in Balto, MD
HAMP Loan Modification After Divorce

Kate,

I got a HAMP loan in my and my husband's name, because we were both the originators of the loan.

We are going through a divorce and he signed a quit claim deed. But out of spite, he wants me to give up the house, even though I am always current on the mortgage payments.

How do I get this in my name only without refinancing?

Thanks, Dawn

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: HAMP Loan Modification After Divorce

Hi Dawn,

First things first, it sounds like the title to the house is already in your name since your husband signed a quit claim to the deed. But that does not necessarily mean he is off the mortgage obligation.

Go here to learn how to learn how being on the mortgage yet not on the title can leave a borrower in a precarious position.

Assume Your Mortgage After Divorce

But I digress. Your main question is about getting your spouse's name off the mortgage. Short of refinancing or modifying your financing's existing terms, you could call your loan servicer about assuming your mortgage.

Assuming your mortgage means your husband's name would come off the mortgage and you would be solely responsible to pay back the balance according to the terms of the loan.

If your income is sufficient to meet qualification guidelines (in other words, without your husband's income), you might be able to accomplish this relatively quickly. Because the assumption paperwork is minimal as are the closing costs, it could be the simplest solution.

Best wishes and good luck,

Ask Kate

Unaffordable Mortgage After Divorce

By Sandy S. in N Stonington, CT
Unaffordable Mortgage After Divorce

Kate,

I recently divorced and was awarded the house. My husband did not pay the mortgage since March of this year and I notified the bank as we were already in a 2% refinance program for 4 years.

They sent me a good faith estimate and are charging me all the back money, new title insurance costs, taxes and insurance, and $900.00 processing fee, etc.

We had money left in escrow and they did not apply it to this closing and they want me to bring in $6424, which I do not have.

I am currently unemployed and cannot afford this mortgage, so I am listing my home for sale. We have been in this home for 20 years and already have title policies which have my name on them.

I need advice on what to do at this point? Thank you.

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Unaffordable Mortgage After Divorce

Hi Sandy,

The thought of selling your home after owning it for 20 years can't be easy. Even so, you are smart to be proactive and take steps before foreclosure becomes an immediate threat.

HAFA Foreclosure Alternatives: Short Sale and Deed in Lieu of Foreclosure

If Fannie Mae or Freddie Mac owns your mortgage, you may be eligible for the Home Affordable Foreclosure Alternative Program (HAFA). In some instances, borrowers are rewarded with a cash payment for participating in one of the options.

Successfully completing a HAFA alternative also side steps the damage of a negative foreclosure record on a homeowner's credit history.

Read about the main two options in the HAFA Program - Real Estate Short Sale and Deed in Lieu of Foreclosure - before calling your loan servicer to get the ball rolling.

HAUP Mortgage Forbearance

If your mortgage is not backed by Fannie Mae or Freddie Mac, you can also read about HAUP Mortgage Forbearance, another option from the Making Home Affordable Program but specifically for unemployed homeowners.

Deb's Story About Mortgage Foreclosure

Next meet Deb, a homeowner who had some tough decisions to make at Short Sale vs Mortgage Foreclosure - The Agony of 21st Century Homeownership.

She wrote me back to let me know of her decision at Reaffirm or Not to Reaffirm a Mortgage after Bankruptcy.

I wish you the best,

Ask Kate

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Potential Downsides to Quit Claim Deed Before Divorce
by: Chris from Sacramento, CA

Hi Kate - I am in the middle of a divorce and my soon to be ex, wants to buy a new home. She is currently living at the house (I moved into a rental) which is underwater.

In order to purchase a new house, she would like to Deed the current house she is living in to me. I would then short sell after the purchase is complete.

What are the potential downsides for me in doing this?

Hi Chris, Kate here...

If your (soon to be) ex quit claims your jointly owned home to you, you might be considered the sole owner. But I urge you to consult an attorney for legal downsides because you live in a community property state.

In spite of the quit claim, she will still be named as a borrower on the mortgage. Thus her credit scores (as well as yours) could suffer due to the short sale.

If you are not currently living in the house, short sale may not be as advantageous to you. Check with your lender on the amount of time you need to occupy the home before it is considered your principal residence. Ditto with your CPA so you don't get surprised with an ugly tax liability.

Hopefully your lender would let you know if they are going to require your ex's signature to complete the short sale. Once she quit claims, she may be unwilling to take the time to be involved.

See more on quit claim deeds at Sell Your House Safely: Understanding Title vs Mortgage.

Best wishes, Kate

How to Get Spouse Off Mortgage After Loan Modification
by: Carin from Grover Beach, CA

I have a Hamp loan with Bank of America. It is in the 5th year of the modified loan. My ex no longer has interest in the property as the house was awarded to me in the divorce decree. I have paid it on my own for the past year and now per decree need to remove his name from the loan so he is no longer liable financially.

The bank is giving me the run around. What do you know about this process. Please help! Trying my best to not have to refi.

Hi Carin, Kate here...

You didn't mention that Bank of America has discussed a loan assumption so that is what I'd suggest pursuing. Loan assumptions are generally an inexpensive way to get a co-borrower off a mortgage in the case of divorce.

Learn the details on this page and at Mortgage Modification: Debt, Divorce, Assumption where you'll scroll down to Stephanie's question (second on the page) followed by my answer.

Best wishes, Kate

Loan Modification after Divorce
by: Jenn from Boston, Mass

During my divorce, I had the title to our property signed over to me. I was approved and now have a loan modification. Thank goodness. My divorce papers were signed on Tuesday.

I filled out all of the modification paperwork only in my name. Is he still on the house or is it solely mine now? Part of my divorce decree bought him out of his portion.

Please help.

Hi Jenn, Kate here...

Was the executed quit claim deed taking your ex-husband off the title to your home recorded at the county recorder's office? Your divorce attorney should be able to give you a status update on this since it was part of the divorce procedure.

Then, you'll need to call your loan servicer to ask if the modification process actually included removing your ex from the mortgage paperwork or if they only based the approval on your qualifications.

If your ex-husband's name was not removed from the mortgage obligation, ask the loan servicer if it's still possible to tie up this loose end.

Best wishes, Kate

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