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    Mortgage and Divorce Question

    I have a question, not for me... but for my friend.

    Let's say a couple buys a house for 140G and put down 3G as down payment for the house. They've been paying this house for past year.
    Value of house goes down slightly and they owe more than house actually it worth if they are to sell them today. How do they need to split this mortgage/house? State of KS is 50/50 split state.

    Thanks!



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    Re: Mortgage and Divorce Question

    Quote Originally Posted by greatshu View Post
    I have a question, not for me... but for my friend.

    Let's say a couple buys a house for 140G and put down 3G as down payment for the house. They've been paying this house for past year.
    Value of house goes down slightly and they owe more than house actually it worth if they are to sell them today. How do they need to split this mortgage/house? State of KS is 50/50 split state.

    Thanks!


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  3. #3
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    Re: Mortgage and Divorce Question

    I'm not sure I understand the question. If they are splitting the marital assets 50/50, then just as they would split 50% of any net worth, wouldn't they also split any loss 50/50?

    So if they purchased the house for 140 and now the house is worth 130, they essentially have a loss of 10. If one party assumes the mortgage (and thus a loss of 10), then the other party should have to either give up 5 in assets to the party assuming the mortgage or take on 5 in liability to make up the difference.



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    Re: Mortgage and Divorce Question

    Quote Originally Posted by greatshu View Post
    I have a question, not for me... but for my friend.

    Let's say a couple buys a house for 140G and put down 3G as down payment for the house. They've been paying this house for past year.
    Value of house goes down slightly and they owe more than house actually it worth if they are to sell them today. How do they need to split this mortgage/house? State of KS is 50/50 split state.

    Thanks!
    As long as both parties signed the promisory note they are both liable for the debt (regardless of whom ever was granted possession of the houes as a result of the divorce decree).


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    Re: Mortgage and Divorce Question

    Quote Originally Posted by GoCubsGo View Post
    I'm not sure I understand the question. If they are splitting the marital assets 50/50, then just as they would split 50% of any net worth, wouldn't they also split any loss 50/50?

    So if they purchased the house for 140 and now the house is worth 130, they essentially have a loss of 10. If one party assumes the mortgage (and thus a loss of 10), then the other party should have to either give up 5 in assets to the party assuming the mortgage or take on 5 in liability to make up the difference.
    Each party is responsible for the full amount of the debt. In your example, each party has a liability of 10.

    The only way to change the amount of the liability is to refinance the debt so that the debt is solely the obligation of one party.


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    Re: Mortgage and Divorce Question

    Sell the house and split the proceeds or agree to a home value and divvy the other assets to make it even.



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    Re: Mortgage and Divorce Question

    Quote Originally Posted by Cydkar View Post
    Sell the house and split the proceeds or agree to a home value and divvy the other assets to make it even.
    The question assumed that there would be a loss from the sale of the house.


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    Re: Mortgage and Divorce Question

    Fake your own death.



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    Re: Mortgage and Divorce Question

    Quote Originally Posted by alaskaguy View Post
    The question assumed that there would be a loss from the sale of the house.
    They can still use their other assets to make it all square. One could take all the debt but an equal amount of assets from the other.



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    Re: Mortgage and Divorce Question

    Quote Originally Posted by Cydkar View Post
    They can still use their other assets to make it all square. One could take all the debt but an equal amount of assets from the other.
    One can not take all the mortgage debt without the lender agreeing to such an arrangement. Lenders rarely if ever release a borrower from liability.

    Even if the former husband and wife agree to such an arrangement, from the lenders perspective both parties remain liable for the debt. Furthermore, if both the former husband and wife agree to such an agreement, and there is a default on the debt, both parties will be reported as defaulting on the debt.

    Again absent the sale of the house, the only practical way for one of the parties to be released from the debt, is to refinance the loan. However, in this case since the debt exceeds the value of the property, refinancing doesn't appear to be a viable option.


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  11. #11
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    Re: Mortgage and Divorce Question

    Quote Originally Posted by greatshu View Post
    I have a question, not for me... but for my friend.

    Let's say a couple buys a house for 140G and put down 3G as down payment for the house. They've been paying this house for past year.
    Value of house goes down slightly and they owe more than house actually it worth if they are to sell them today. How do they need to split this mortgage/house? State of KS is 50/50 split state.

    Thanks!
    I have a question as well, not for me.... but for my friend.

    He has this itch in an area that should not itch. Thinks he may have got it last weekend from this girl he met at the corner of 6th ave and University in Des Moines. Since he paid this woman a $100 is she contractually obligated to pay for half the prescription expense to resolve this aforementioned itch?



  12. #12
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    Re: Mortgage and Divorce Question

    If they want to sell the home, depending on how underwater the home is, they could cash out some assets and pay down the mortgage enough to where it wouldnt be a short sale.

    What to do with a house that’s under water in a divorce | Massachusetts Divorce and Wills Lawyer Blog
    lists the options pretty well. many lenders wont renegotiate (the last one listed) but it could be worth a shot .



  13. #13
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    Re: Mortgage and Divorce Question

    Quote Originally Posted by alaskaguy View Post
    One can not take all the mortgage debt without the lender agreeing to such an arrangement. Lenders rarely if ever release a borrower from liability.

    Even if the former husband and wife agree to such an arrangement, from the lenders perspective both parties remain liable for the debt. Furthermore, if both the former husband and wife agree to such an agreement, and there is a default on the debt, both parties will be reported as defaulting on the debt.

    Again absent the sale of the house, the only practical way for one of the parties to be released from the debt, is to refinance the loan. However, in this case since the debt exceeds the value of the property, refinancing doesn't appear to be a viable option.
    This is the case. Either they refi or take care of the risk that the non-possessor has on the mortgage.


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    Re: Mortgage and Divorce Question

    Both are liable for the loss, if one does not pay thier share of the loss the other would have to. Have a friend who ended up paying off his ex wife's credit cards bills she ran up before the divorce because she wouldn't or couldn't pay even though it was in the settlement. Messed with his credit score big time.



  15. #15
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    Re: Mortgage and Divorce Question

    I would highly recommend that they refinance to one or the other if possible. My only 30+ day ding to my credit is when my ex-wife rented our house to her sister (and allowed the sister to make the payment directly)



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