Tuesday, September 2, 2014
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

I’ve got an upside down mortgage and not-so-nice former spouse

By
From page C3 | September 22, 2012 |

Q:  My husband and I got divorced several years ago. The agreement was that both of us would stay on title to the house but I would make the house payments and live there. Of course,  like so many other people, we are now very upside-down on the value of the house. Also, I work for the county and with all the cutbacks my pay has gone down. Affording the house is becoming increasingly difficult.

I would like to short-sell the house. I called my ex-husband, now remarried, and told him what I would like to do. His response was that he wasn’t going to agree to anything, period. We have two loans on this house. The second mortgage was a line of credit we took out when we got divorced so I could give him cash in exchange for him agreeing to let me stay in the house and not sell it. At this point I don’t know what to do.

 A: Just based upon what little you’ve told me, I can tell you that a short sale makes the most financial sense for both of you.

There’s really only three ways to get out from under an upside-down mortgage.

You can take money out of your savings to pay the difference between what your home is now worth and what you owe.

If you’re willing to do that, you can simply sell the house.

Since few people are able or willing to write a big check to the bank, your only other choices are to short sell or allow the home to go into foreclosure.

Foreclosure carries some advantages, along with some big disadvantages.

In your case, you have a second mortgage that amounts to a huge problem.

Regular readers will recall that homeowners who meet certain qualifications and still have the original loan they used to purchase the property enjoy certain liability protections as a matter of law.

In other words, if you live in the home and have never refinanced, you likely have a loan commonly known as a purchase money loan. If so, a purchase money loan can’t sue you in the event you lose the property.

However, you mentioned that you took out the second mortgage in order to pay off your ex-husband.

Since you got that loan after you purchased the property, that loan is known as a recourse loan, meaning the bank can sue you for any money it loses after a foreclosure.

So, put another way, if your ex-hubby doesn’t cooperate in the sale of the house and you simply stop making payments, eventually the first mortgage will foreclose. Doing so will wipe out the second mortgage, and the financial institution will then sue you and your ex for whatever money it lost in the deal.

At that point, your only options will be to pay the judgment, file for bankruptcy or sit and watch as the bank goes after your salary, bank accounts and any assets you may own.

Under the new laws regarding short sales that went into effect last year, a short sale will avoid all of those problems.

However, a short sale would require your ex-husband to sign the closing papers, particularly the deed.

The hammer you have is if you’re willing to stop making payments and a foreclosure occurs, the bank will sue both of you and take their money from whomever it can.

Perhaps showing your ex-husband this column might help.

If, however, you can’t get your ex-spouse to think rationally about the problem and you’d rather not let it go into foreclosure and perhaps have to file for bankruptcy protection, there are some choices.

Depending upon exactly what your divorce’s settlement agreement says, your family law attorney may be able to go back into family law court and get a court ordering requiring your ex to participate in the sale.

If that’s not possible, the filing of a partition lawsuit will do the same thing, only the timeline will likely be much longer and the costs higher.

I wish I could give you an easy solution. But your ex-husband is simply taking the path of mutually assured destruction instead of thinking logically and in his best interest.

Hopefully, with time for a little reflection, he’ll come around.

Tim Jones is a real estate attorney in Fairfield. If you have any real estate questions you’d like to have answered in this column you can contact him at SolanoScene@TJones-Law.com.

LEAVE A COMMENT

Discussion | No comments

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

.

Solano News

Labor Day not a holiday for everyone

By Amy Maginnis-Honey | From Page: A3, 1 Comment | Gallery

 
Labor Day breakfast introduces union-backed candidates

By Susan Hiland | From Page: A3 | Gallery

Pool provides last dose of summer fun in the sun

By Amy Maginnis-Honey | From Page: A3 | Gallery

 
SafeQuest schedules peer counseling training course

By Susan Hiland | From Page: A5

 
Fairfield police log: Aug. 31, 2014

By Susan Hiland | From Page: A12

 
Suisun City police log: Aug. 31, 2014

By Susan Hiland | From Page: A12

Suisun City police log: Aug. 30, 2014

By Susan Hiland | From Page: A12

 
Fairfield police log: Aug. 30, 2014

By Susan Hiland | From Page: A12

.

US / World

VP Biden says workers deserve ‘fair share’

By The Associated Press | From Page: , 1 Comment | Gallery

 
Obama: ‘Revving’ economy calls for higher wages

By The Associated Press | From Page: | Gallery

Senegal monitors contacts of 1st Ebola patient

By The Associated Press | From Page:

 
San Francisco to be 1st to test urban farming law

By The Associated Press | From Page:

GOP challenger tries novel tactics against Brown

By The Associated Press | From Page: | Gallery

 
US eating habits improve a bit – except among poor

By The Associated Press | From Page: , 1 Comment | Gallery

 
No gray area: Beliefs shape views of Brown killing

By The Associated Press | From Page: , 1 Comment | Gallery

Americans detained in North Korea call for US help

By The Associated Press | From Page: | Gallery

 
Iraqi prime minister pledges to root out militants

By The Associated Press | From Page: | Gallery

Poland’s PM: Ukraine’s war must be stopped now

By The Associated Press | From Page: | Gallery

 
Pro-Russian rebels lower demands in peace talks

By The Associated Press | From Page: , 2 Comments | Gallery

US helicopter crashes in Gulf of Aden; all rescued

By The Associated Press | From Page:

 
.

Opinion

.

Living

Community Calendar: Sept. 2, 2014

By Susan Hiland | From Page:

 
.

Entertainment

Inquiries begin into nude celebrity photo leaks

By The Associated Press | From Page: | Gallery

 
‘Guardians’ tops Labor Day, summer box office

By The Associated Press | From Page: | Gallery

TVGrid

By Daily Republic Syndicated Content | From Page: A11

 
.

Sports

Kirk rallies to win the Deutsche Bank

By The Associated Press | From Page:

 
Rockies top Giants after losing end of suspended game

By The Associated Press | From Page:

Dunn homers in 1st at-bat as A’s top Mariners

By The Associated Press | From Page:

 
Right guard Boone passes physical, rejoins 49ers

By The Associated Press | From Page:

Raiders name rookie Derek Carr as starting QB

By The Associated Press | From Page: B1

 
Armijo beats Vanden 2-0 to claim All-City boys soccer title

By Brian Arnold | From Page: B1 | Gallery

Armed with new deal, Chiefs’ Smith looks forward

By The Associated Press | From Page:

 
Column: Stewart’s Chase status doesn’t matter

By The Associated Press | From Page:

 
Raiders ink CB Dowling, 9 others to practice squad

By The Associated Press | From Page:

Serena Williams, Djokovic roll to US Open quarters

By The Associated Press | From Page:

 
Houston Astros fire manager Bo Porter

By The Associated Press | From Page:

Hamels, 3 Phillies relievers no-hit Braves

By The Associated Press | From Page:

 
.

Business

Markets drift as Wall Street has day off

By The Associated Press | From Page:

 
Austerity debate flares as Europe recovery fades

By The Associated Press | From Page: | Gallery

Civil disobedience expected in fast-food pay fight

By The Associated Press | From Page: , 4 Comments | Gallery

 
.

Obituaries

.

Comics

Beetle Bailey Sept 2

By Daily Republic Syndicated Content | From Page: B6

 
Zits Sept 2

By Daily Republic Syndicated Content | From Page: B6

Wizard of Id Sept 2

By Daily Republic Syndicated Content | From Page: B6

 
Sally Forth Sept 2

By Daily Republic Syndicated Content | From Page: B6

Bridge Sept 2

By Daily Republic Syndicated Content | From Page: B7

 
Blondie Sept 2

By Daily Republic Syndicated Content | From Page: B6

Rose is Rose Sept 2

By Daily Republic Syndicated Content | From Page: B6

 
Get Fuzzy Sept 2

By Daily Republic Syndicated Content | From Page: B6

Sudoku Sept 2

By Daily Republic Syndicated Content | From Page: B7

 
B.C. Sept 2

By Daily Republic Syndicated Content | From Page: B6

Baldo Sept 2

By Daily Republic Syndicated Content | From Page: B6

 
Frank and Ernest Sept 2

By Daily Republic Syndicated Content | From Page: B6

Crossword Sept 2

By Daily Republic Syndicated Content | From Page: B7

 
Dilbert Sept 2

By Daily Republic Syndicated Content | From Page: B6

For Better or Worse Sept 2

By Daily Republic Syndicated Content | From Page: B6

 
Peanuts Sept 2

By Daily Republic Syndicated Content | From Page: B6

Cryptoquote Sept 2

By Daily Republic Syndicated Content | From Page: B7

 
Garfield Sept 2

By Daily Republic Syndicated Content | From Page: B6

Word Sleuth Sept 2

By Daily Republic Syndicated Content | From Page: B7