By: Camille Sebreth, Esquire

In the past few years, I have represented divorced clients who were solely responsible for the marital home and seeking a loan modification in an effort to save their property from a foreclosure. Many times, the divorces were done between the parties either pro se or represented by counsel. Either way, majority of the time, the final judgment for the divorce did not specifically state what should be done in the case of a loan modification or any other loss mitigation option which tends to wreak havoc in the loan modification process. The biggest problem I run into is when the marital home has both the husband and wife on the deed AND the mortgage. If the final judgment and/or the marital settlement agreement does not specifically state that (1) the house is awarded to the husband or wife and (2) the non-responsible spouse should quit claim the deed to the spouse that is responsible for the home in the case of a loan modification OR the non-responsible spouse agrees to supply their financial information to the mortgage company for a loan modification application, then a lender may be required by their guidelines to automatically deny the loan modification for lack of proper documentation. If you’re filing for a divorce and you intend to apply for a loan modification due to a pending foreclosure or because of the loss of the other spouse’s income, you may want to consider the following:

  1. For spouses that are both on the deed and mortgage: decide who is going to be solelyresponsible for the home. Make sure the marital settlement agreement and/or the final judgment(divorce decree) specifically states who is awarded the home.
  2. If the sole income for the responsible party is not sufficient to support a mortgage payment oreven a modified mortgage payment, you may want to consider applying for a loan modificationtogether prior to the divorce being finalized. That way, the income for both parties can beanalyzed and used to possibly qualify the borrowers for a loan modification. Both parties will most likely be required to sign off on the final loan modification documentation if they were both on the original mortgage.
  3. Make sure there is a clause in the marital settlement agreement and/or the final judgmentabout the non-responsible spouse’s cooperation in the event of a loan modification after thedivorce is finalized. The non-responsible party may need to sign and record a quitclaim deedwith the county. If they do not agree to a quitclaim deed, then the marital settlement agreement and/or final judgment should state that they are required to cooperate if they’re obligated by the lender to include their financial information as part of the loan modification process. The divorce documents should also state the non-responsible spouse’s duty in case they are required to sign off on the final loan modification documents. Remember, if there is no court order that specifically states that the ex-husband or ex-wife is required to participate, sign or agree to a loan modification, then they don’t have to do anything if the responsible party is seeking a loan modification. However, if there is a court order that addresses the potential issues for divorced borrowers and they don’t abide, the uncooperative former spouse can possibly be held in contempt and ordered to follow the final judgment by a judge.

 

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About The Author Camille Sebreth is the President of the Law Office of Camille Sebreth, PLLC with the main office located in Orlando, Florida. She received her law degree at Florida A&M College of Law and her undergraduate degree from University of Florida with a Bachelors in Sociology. Attorney Sebreth entered private practice in 2008 to concentrate on debt relief services including Bankruptcy, Foreclosure Defense, Loan Modifications & Credit Card Negotiations. She also assists clients in Immigration and Divorce cases. In 2013, she was the only female attorney of three attorneys chosen in the nation for the prestigious National Conference of Bankruptcy Judges Blackshear Fellowship. The Law Office of Camille Sebreth, PLLC is a small boutique firm that represents the legal rights and goals of those in need of legal services in the Central Florida area. For a confidential legal consultation, please call (407) 556-7589. For more information about her firm, please visit: www.SebrethLaw.com.

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