Got this email the day after Christmas:
Good morning Noel and Andy,
I hope y’all had a wonderful Christmas.
My question this morning:
How do I get my name off the current mortgage when my husband is buying me out and he does not want to refinance?
Is there another way to remove it from my credit report besides him refinancing? His attorney is telling him it will be taken care of. I know I can get removed from the title of the property through court documents but that does not remove my name off the credit report.
Ashley [not real name]
This is very important. Thanks for writing about this.
His attorney might be referring to your “coming off” title or the deed for the house. But, you are 100% correct - no attorney or court can pronounce that a party will be relieved of a debt – except a bankruptcy court…and, that’s a whole different issue. So, this may be bad advice or there may be something “lost in translation.” In any case, the only thing that relieves you of the debt obligation is your [ex]-husband RE-financing the debt in his own liability.
The short answer to your question is: Require it in the divorce settlement. That is, two things should be taken care of in the agreed settlement regarding the house. #2 is the buyout to you. #1 is the requirement that he refinance the debt out of your liability and into his own. #1 should be taken care of irrespective of a buyout; although, a buyout is often part of the refinancing action.
Now, attorneys often argue that a court cannot require a lender to advance funds; thus, a court cannot REQUIRE a party to refinance a debt and the attorney argues that requiring a refinance just cannot be done. This is when you see provisions in a divorce like “[Party] will make best efforts to refinance at least once per year until he/she has done so…” This is nearly laughable were it not so sad and had such arrangements not produced such catastrophes (like ruined credit, loss of value in homes, loss of home ownership, etc.). Any borrower can obtain a denial letter from any “friendly” mortgage professional. Sometimes, these denials are legitimate. Sometimes they are not. But, why would a court believe that it was in the interest of either party and the community NOT to know – IN ADVANCE – if such financing could, in fact, take place? This has been my crusade and battle cry for 16+ years now. And, there is NO reason for anyone to NOT KNOW exactly what financing is approved and ready to close...no reason, that is, if they call me.
Moreover, this is sloppy, “legal” reasoning. The court – in a divorce action – can absolutely, effectively require the refinancing. Here is how it’s done.
1. The decree states that husband will refinance the debt – BY A CERTAIN DATE OR TIME FRAME (e.g. “…within 60 days after entry of final decree.”)
2. The decree states that “…if the refinancing has not occurred by this date, the house will be…” at this point there are options. One option which you probably do not want would be that the awarding of the property reverts to you. What is most likely in your case is that the property would be listed for sale with a licensed real estate agent.
3. If the parties (you and your husband) cannot agree on terms of a sale (agent, price, terms of contract, etc.) then the court will appoint a receiver to manage the sale of the house. This is a serious step and invites lower offers – because the agent/receiver in that case does NOT work in the interests of the seller but in the interests of the court which is, simply, to get the house “off the books.” The receiver TOTALLY controls the property at that point – the “sellers” do not even have to show up for a closing as the receiver is authorized by the court to sign everything. It’s serious business.
a. For this reason, parties might skip step #2 and go right to #3.
b. Obviously, agreement of parties on reasonable terms of sale can forestall future difficulties and problems.
c. Husband would be “under the gun” so to speak to get the refinancing done.
If he would call me, I would walk him through it, do the financing for him and work in his best interests AS CONCERNS HIS LOAN. I have never hard to harm one side in order to help the other. In fact – think of your case – if I help him get favorable financing, it actually works in your interest as well as his.
But, I would NEVER allow the debt to just “hang out there.” It’s an invitation to disaster. And, it’s met with the eye-rolling statement – “What could POSSIBLY go wrong with THAT scenario!?!?!”
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