Replies to This Discussion

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on March 15, 2013 at 5:06am

The ex-husband may have signed a Quit Claim Deed BUT, they are both equally responsible for the Mortgage.  My experience has been the lender / investor will not go through with a short sale without both signatures and all of the information.  Your client should speak with an attorney - Bankruptcy may be her only option which would then place the debt 100% onto her ex-husband unless he files BK as well.

Good luck

Permalink Reply by Elvira Quiray on March 18, 2013 at 3:05pm

Thanks. I will let her contact an attorney.

Permalink Reply by Tammy Davis on March 15, 2013 at 5:10am

Elvira,

You might check to see if the house was a part of the divorce settlement. I had a short sale with Chase, same scenario and I wrote a letter of explanation regarding the ex-spouse, provided the QC Deed and property settlement of divorce decree...that satisfied them and they no longer needed info for the spouse.

Hope that is helpful.

Permalink Reply by Elvira Quiray on March 18, 2013 at 3:08pm

I will find out about a property settlement decree. Thanks for the info.

Permalink Reply by Joy Baker on March 15, 2013 at 5:43am

I have handled a number of short sales where divorce was the hardship and, in all cases, as long as there was a final divorce decree and a Quit Claim Deed, no info was required from the ex-spouse.  I am, however, in the middle of a go round with Bank of America with a similar issue.  Although they do not want the ex-husband's financial info, they want him to sign the 3r party authorization.  Well, he's no where to be found...

Back to your issue, Elvira...who owns your client's loan?  Is it a Fannie or a Freddie?  As part of the Servicing Alignment Initiative both Fannie and Freddie issued new short sale guidelines last summer which were to be followed by Servicers as of November 1, 2012.  These guidelines indicate that divorce is an eligible hardship and the Hardship Documentation required is one of the following:  Divorce Decree signed by court, Separation Agreement signed by court, current credit report evidencing divorce, separation or that the non-occupying borrower or co-borrower has a different address or recorded Quit Claim Deed evidencing that the non-occupying borrower or co-borrower has relinquished rights to the property.

Permalink Reply by Elvira Quiray on March 18, 2013 at 3:10pm

As far as I know, it is none of those- not Fannie or Freddie.

Permalink Reply by Jen Hill on March 15, 2013 at 6:07am

Hi Elvira, if I'm not mistaken, the Quit Claim just gives her the rights to the home, but it does NOT release the hubby from his responsibility of the loan.  :(

Permalink Reply by Elvira Quiray on March 18, 2013 at 3:07pm

That is what Chase is saying. The ex-husband is still liable for the note.

Permalink Reply by Jeff Payne on March 15, 2013 at 7:03am

I had one that was similar and the lender could not locate the ex husband, the seller had a restraining order against him and we had to provide an affidavit from the seller that her ex husband whereabouts were unknown.  That was with Regions Bank

Permalink Reply by Stephanie Summers on November 5, 2013 at 10:16am

Question: My clients are going through a short sale that is ready to be submitted to Fannie Mae. They are also preparing to file for divorce (keeping it on the down low from their children) but have put it off while dealing with the short sale. They did explain it as part of their hardship and why they are selling the home-since neither one can afford it alone. So, of course, Fannie wants a copy of a separation agreement or credit report showing one of my sellers at a different address. Reading the guidelines I also see that a recorded quit-claim deed showing a relinquishing of rights to the property also works. If the wife has never been on the loan or deed, isn't that enough? They are current on the mortgage and instead of either moving out yet (and spilling the beans to the kids) they are trying to pay off all of their bills so it's not such a struggle after they go their separate ways. Suggestions?

Permalink Reply by joe beauchamp on November 5, 2013 at 11:09am

I assume you also mean that the wife is not on the mortgage, either, but you didn't say. In NJ, the marital home automatically belongs to both so would require both to go through the sale (or have a quit claim for one of them). I assume your state doesn't have this law in which case the wife should not be a part of the sale. The quit claim would make it clear that there is no legal complication to the wife not being a party to the sale, it could be done and redundant w/o hurting anything. The sales agreement should not include the wife otherwise you will confuse the bank people, etc.

Since only the husband is on the note/mortgage (the deed is important for the sale, should not be to the bank), you should separate bank accounts for each. Assuming that the husband is the only one on the note and mortgage, the bank has no right to the wife's finances. By having separate funds, you can give the bank all of the husband's finances w/o including the wife's and the bank would have everything it is legally entitled to. I'm guessing that they filed taxes together. That could come up as an issue, however, that is in the past so should not be a big problem.

I don't see that a separation agreement is necessary since the wife has no responsibility to the bank. Only 1 is responsible to the bank if only 1 signed for the loan (from what you've said).

Anything that entangles the two can create an issue - like joint credit cards, joint savings. Separate them.  You aren't dealing with legal giants at the bank, so don't be surprised if they ask for things that they should not have. The issues loom when they have info that they should not have. Although they are supposed to only see their owner's finances, if they see that he has a joint account with someone putting in $1MM/month, they are not right in assuming that the money is the owner's, but they will - it's human nature. So, keep everything separate and only give the husband's info to the bank.