No one else – other than my readers and subscribers – know to do these three things. Yet, if you employ these three simple tips, you will be in the TOP 1% of attorneys and mediators – really, the top fraction of a percent. It will not always be this way because word is getting out – slowly, steadily, but surely. Be a leader and show your colleagues the way.
These tips will set you apart as a family law specialist. When you pull these cards from your hand, it will have the value of near shock to opposing…and, in a good way. They will not expect this. They have NEVER seen it, unless per chance, they have been on the other side of a customer with whom I have been working.
1. The Value of an Assessment/Approval Statement from me.
This one can save hours of “can she afford the house on her own?” “can she/he qualify for a loan without a job?” “We think his credit might not be that good” and my favorite – the all time dumbest reason to not require refinancing of a jointly held debt on an awarded asset – “we’ll give you a Deed of Trust to Secure Assumption” as if that will relieve debt. (PS: it’s actually the awarding of a “contingent” debt…but let’s not get side-tracked).
The point is, a letter from me that says “we can do the financing under these conditions” can turn two hours of wasted, meaningless, un-knowledgeable discussion into 5 minutes. There is no guessing. There is no need for merely hoping. No confusion. Nothing but, “my client can qualify for their own financing and they can consummate the deal by X date.”
Now, I need a little time to produce this. Briefly, I can do a pretty good letter in a few hours. But, if we have a couple of weeks, my letter can say “THIS IS NOT JUST A PRE-APPROVAL – this client’s loan has been UNDERWRITTEN and APPROVED. All we need is agreement and the judge’s signature….sign here.” I’m telling you – it’s amazing!
2. When negotiating a buyout (of any amount for whatever consideration and you are tempted to affix (memorialize in an IRREVOCABLE agreement…which some lawyers erroneously think is unchangeable or un-modifiable in its language) use this phrase:
“Net buyout to spouse is $ XX,XXX.XX; FINAL OWELTY LIEN TO BE DETERMINED BY LENDER IN CONSULTATION WITH THE BORROWER.”
Even better is…
“Net buyout to spouse is $ XX,XXX.XX, FINAL OWELTY LIEN TO BE DETERMINED BY NOEL COOKMAN (LENDER) IN CONSULTATION WITH THE BORROWER.”
Here’s why this is critical.
If the decree cites the net buyout to spouse as the Owelty interest, than any other dollars financed in the customer’s loan will be considered “cash out” with severe limitations on financing. If all cash needs are cited as part of the Owelty interest, then none of those other dollars will trigger the onerous Texas Home Equity Cash Out provisions.
But, sitting in mediation, you don’t know what that total amount is.
Since, the financing of an Owelty (in the context of a refinance of the mortgage) cannot transpire until after divorce, the MSA is not underwritten, only the decree is. So, if net buyout to spouse is $50,000 and another $25,000 is needed, you can cite the Owelty in the final decree as $75,000 “TO BE DISBURSED AS” 1. $50,000 to ex-spouse, 2. $15,000 to credit cards and 3. $10,000 to your trust account to make sure all remaining legal fees are paid…or some configuration of that.
Don’t try this at home…this is a job for the professionals. Which is to say, make sure I am reviewing the settlement and performing the loan financing. Hook me up with your client or with opposing. We don’t have to hurt one side in order to help the other. In fact, we help one side BY helping the other.
3. When the other side is demanding your client refinance the debt on the house (in order to remove their client from its liability – mostly a reasonable requirement) here is the most common hot-button issue and how to address it. Their client thinks – as does what seems to be the entire literate world – that so long as the current mortgage appears on their credit report, they will not be able to qualify for an additional mortgage, their all-important debt/income ratios being too high.
Well, they are half-right. Debt ratios are supremely important, nearly a matter of law. Silly law (Dodd-Frank) but law, nonetheless.
Here is how to address it – quietly, calmly but with great force.
Just say this:
Your client’s mortgage and other housing liabilities are EXCLUDED from their debt ratios by simply the standard assignment of that debt to my client in the divorce decree or Rule 11 Agreement (Rule 11 in the instance when a party wishes to purchase a home before final divorce). IT’S AN EXCLUDABLE DEBT FOR MORTGAGE QUALIFYING.
Yep. It’s that simple and YUGE! But, hardly anyone in the mortgage world knows this and – it is hardly an exaggeration to say that NO ONE IN THE FAMILY LAW WORLD knows this. Well, now there’s YOU.
More to follow. If you join my Platinum Club Inner Circle, I will give you a citation of the precise guidelines from Fannie Mae, Freddie Mac, HUD (FHA) and VA. It’s a cheat sheet that will blow your mind…and blow your competition off the map.