Replies to This Discussion

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on May 31, 2011 at 9:51am

Glenn-

The answer is pretty simple.  They BOTH signed the Loan Docs and they are BOTH 100% responsible for the debt - no matter who is living - or not living - in the property.  Many homeowners "forget" they are completely responsible for the entire debt.  If I were you, I would make sure they both know the fact they are both responsible for it.

I had a similar situation recently and when they finally realized they were both 100% responsible even if the other walked away - the husband filed BK which forced the soon-to-be ex-wife to file BK as well.

If they are truly going to be Divorced, they need to seek legal counsel ASAP - or they will both be taken down by this.

 

If you look at it from the lender's perspective, they have two borrowers who are both responsible for the debt and they both have income that is enough to cover the mortgage.  In effect, there is no financial hardship regarding this debt.

 

Best of luck,

Thom Colby

Broker / Negotiator

Newport Beach CA

Permalink Reply by kristi on May 31, 2011 at 9:54am

Glenn- Please see below in response to your questions/concerns:  My answers are in bold

 

The situation is this: the husband and wife purchased the home together. Their combined salaries were sufficient to carry the loan. Some months ago the wife moved from the home, husband and wife are separated, and both are now seeking a divorce. I don't believe either party has filed for divorce.

Although they purchased the house together are they both on the loan?  If not then you should only be including the person who's on the loans income and not both unless they specifically request that information.

 

The husband and one child are living in the house. The husband's income is not sufficient to cover the mortgage plus other household expenses. The wife accepts no responsibility for helping pay the mortgage and other expenses. The husband's only alternatives are a short sale or foreclosure. Since both the husband and wife are on the loan and on the deed, both are affected in the same way if the property goes to foreclosure

 

Also you say only the HUSBAND is living in the house now with the child.  If the wife isnt living there where is she living?  If she or they are paying rent somewhere else did you include that on the financial worksheet?

 

Wells Fargo tells me that the only way a short sale can be done is to present a divorce decree and a quitclaim deed granting the property to one of the parties. .

 

Even if you do a QCD one may be off the property but not off the loan.  So i dont see how that would matter.  I just had this happen on one of my shortsales where they said he was making too much, however they were taking into account his social security income.  Once i told them they cant include his social security income as income they then changed their tune.  Also i had this happen before and i told them that although they havd enough to pay at the time that if they keep going at this rate of expenses they would be broke.  Did you ask if they could consider the short sale if the buyer or seller contribute cash at closing?

 

I hope ive helped and good luck!

 

 

 

 

 

Permalink Reply by jennifer mullen on May 31, 2011 at 3:45pm

I have this situation right now with a B of A short sale.  When husband left wife tried to modify the loan.  B of A told them to do a quit claim deed and then looked only at her financials for the attempted mod.  Now that it's in short sale they wanted both names on all contract docs but are only considering her finances again.  She's doing a cooperative short sale.  They asked for the legal separation papers, though.  I would advise your clients as well to seek legal counsel and consider filing for a legal separation to clarify the situation.

Permalink Reply by joe beauchamp on June 1, 2011 at 11:10am

Wow - is this strange.  A mortgage and note are straight-forward - you signed it, they want your money.  It seems like you are dealing with some real lunkheads.  You can't walk away from the debt with a divorce or quitclaim or "na na my fingers were crossed when I signed it".  If their names are on the mortgage, BOTH are responsible for that - if their names are on the note, BOTH are responsible for that and only payoff or the bank can change that situation.

 

I'm guessing that even if you did these things requested, you'd find that some nimrod at WF was talking out of his hat and when this goes to FHA for approval, they'll be dragging the papers around to show everyone else what "this knucklehead thought he'd get away with" -- that guy being you, unfortunately.  And then they'd deny it and you'd start all over - with even a bigger mess created by this WF person.

 

I assume you mean that both names are on the mortgage, too, when you say they are on the deed.  And the wife walking away saying "you touched it last" doesn't fly too well in court.  I don't see how a quitclaim changes anything except that anything positive will go to the person left with the property.  Both are foreclosed upon, both will be sued for the note.

 

You get that wiz at WF to commit in writing that someone can walk away from owing WF money by getting divorced and signing a quitclaim and circulate that puppy here.  I'm guessing that there are a slew of breadwinners out there who would have no problem quitclaiming a property to walk away and divorce the spouse at the same time.  And this avoids foreclosure or bad credit for the breadwinner?  Yeah, right...

 

OK, if you really want to get to the bottom of this, demand in writing what this person is telling you - if that happens, call in to WF and get someone in management to commit in writing that it is correct.  If that happens, call FHA and ask them to commit the same.  My assumption is that you won't get to step 2 and then you demand the answer as to what really is needed.  When that fails, because this person is clearly punting, get his supervisor to tell you what is needed - the normal route of escalation.  [Really, would you let someone take a note that he owes you $500K to his idiot cousin and tell you it is now your problem to collect from this cousin instead of him?  Do you really think FHA would do that?]  Nah, you just got someone at WF who probably won't be there in 2 weeks..

Permalink Reply by Wendy Smith on June 8, 2011 at 11:02am

so maybe they should get a divorce?  I had to submit a copy of the Marital Dissolution Agreement on a recent FHA short sale.