Divorce Mortgage – Owelty Deed
Hey. MortgageMack here!
I think I’ll do a different installment on divorce, which is just for a lot of people are— I guess for some it could be rather liberating. For others, it’s a real challenge and a real challenge financially.
So, I had a scenario recently where a person was divorced and the divorce decree wasn’t neatly executed properly or what I would consider properly by their attorney.
Divorce Mortgage – Owelty Deed can pay you your equity and relieve you of liability
If you’re married and you have common debt, specifically a mortgage, then the divorce decree alone does not relieve you of the liability associated with that mortgage.
However, there is an instrument called an Owelty deed. It’s a deed that allows the owner of a home to utilize the equity they have in a home to assist in the dividing of their property. So, the Owelty deed is in essence a refinance.
So, I’ve done several of these in my career where I have a couple, who are in the process of getting divorced. The one that’s gonna keep the home applies for the mortgage. We refinance and we in essence cash out and without doing an actual cash out home loan. And remember that. This is not a cash out. It’s an Owelty deed. So, it’s a refinance. It’s a regular refinance. And with the decree, with the amount of equity defined in the decree by all parties as they’ve agreed, we pay the other party who will not occupy the home, who will move on be paid their equity share and no longer be obligated on the loan.
Divorce Decrees should spell out the division of debt as accurately as it does assets
And so, that’s the situation I found myself in with a client who just didn’t get the appropriate counseling. He thought the divorce decree alone would be sufficient to take the loan out of his name. And unfortunately, his ex-spouse made late payments on the mortgage.
So, I would encourage anybody that if you are listening to this podcast or this video blog that if you know anybody that’s getting a divorce or might get a divorce or anything along those lines, they really should give me a shout and let me coach them to how they will create a scenario that would relieve them of the liability associated with a mortgage and/or allow them to refinance the loan, pay the other spouse off, and take their name off the note because, again, the divorce decree does not supersede the original note signed by the original parties.
Revolving Debt and Installment Loans need to be refinanced or closed where both parties share the debt
In essence or in addition to that, you know, when it comes to common debt associated with credit cards, car loans, all of those things, if you’re in the process of getting a divorce, you should include those debts in the decree not only to be assigned to say the other responsible party, but I suggest that you have them closed and/or your name removed and/or have them refinance without your name on them.
If your getting a divorce, apply at www.mortgagemack.com and we’ll help you
I guess the only way to figure that out is to sit down, do a credit report with your attorney, and look at the common debts and itemize those debts in your request for divorce and make it part of the divorce that the other party has to either refinance the house and/or pay you your equity with an Owelty deed or refinance the house and just take your name off of it and along with any other common debt that you might share with the other party just to protect your credit into the future should the other party experienced any financial difficulties.
So, if you have any questions or comments, please leave them below and/or give me a call.
And I’ll be glad to share my experience with you.
I hope you have a great day. Mortgage Mack out. Take care. Bye.