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Short Sale and Divorce

Posted by Richard Weisser on June 29, 2011 at 6:11am in Short Sale Discussions

Hi folks,

I have a divorced couple interested in selling their house. He still lives in the house, she is out of state. The loan (no seconds) is with Chase.

They are both on title and on the loan.

He would like to stay in the house if possible. The problem is, with their combined income, they can make the payments easily.

But since she has moved and is not contributing, he can't afford the house alone.

My question is this: How do they handle the financial reports? What if one or the other does not cooperate? What is the best way to handle this?

Any and or all suggestions are appreciate!

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Replies

Wendy Martin July 1, 2011 at 3:48am

I have had success using just the Quit Claim on two short sales. Both times I did not mention the husband/ex husband and just submitted the wife/ex wife's packet. However it did not work two other times (with Wells Fargo) so it totally depends on the lender/servicer, and their desire to get the short sale done. One of the successes closed from list in 3 weeks with a cash offer. I don't think the lender really cared about the husband being involved and it was over 800k so they rushed it through for the cash. The other was BofA and no questions asked regarding the ex. I think it's just a crapshoot.
Jeff Payne June 30, 2011 at 2:57am

Eric, Not sure, I was really stating that "if" he had a quit claim already it may be easier with a non coopertaing spouse but if he does not already have one, getting the spouse to sign one is not much different than getting the spouse to sign the deed at closing if they are cooperative.

I think that the spouse doing the short sale just needs to establish that she was left with the home and can not afford it. either way the out of state spouse will still need to sign a deed or quit claim deed, without that they can not close
Eric Mieles June 30, 2011 at 2:15am

Jeff so in the interest of this topic since he's stating the wife is out of state couldn't he approach the wife to quit claim, release her rights to the property and move forward wi the short sale request?
Jeff Payne June 30, 2011 at 2:06am

If you already have a quit claim, you may be able to submit with just the one spouses financials and say that the other spouses whereabouts are unknown which is what caused the hardship. I ran into an issue before with the husband refusing to sign at closing even though the divorce decree stated that wife was to sell the home. If you already have a quit claim, no worry that you even need the husband to sign.
Eric Mieles June 30, 2011 at 1:58am

Harry, Jeff yes you are correct. The quit claim has no bearing on the husbands obligation to pay on the note. However in the interest in getting the short sale approved the decree and the quit claim were enough to allow us to continue with our short sale request. Obviously if the wife doesn't cooperate, short gets denied or a number of other factors then both parties are still liable for the mortgage and face foreclosure even with the decree and quit claim.

My response was more toward finding a solution to allowing him to proved with the short sale to get it done and the (out of state) issue was merely thinking proactive to get all docs in a timely manner.

My file right now husband is not on the listing, purchase agreement, I have no financials nothing for him other than the decree and quit claim. And this is all per the negotiator (chase). Forgive me if I'm wrong. I know the importance of getting all the appropriate signatures however with the decree chase was satisfied to allow us to continue on.
Jeff Payne June 30, 2011 at 1:45am

Harry you are correct. I would not mess with a quit claim. I would get both parties to sign the listing agreement and I would make sure that both parties completely understand this situation and understand the short sale or I would move on. If both are on the note, both will need to provide all of their documentation most likely.
Eric Mieles June 29, 2011 at 4:28pm

Richard, since she is out of state ask the husband if she would be willing to quit claim the deed. Submit the quit claim as well as the divorce decree and it will make things easier.

I have a HAFA Chase right now moving along well. Divorced and have decree in hand. Had the husband go to title and quit claim and then I submitted both. No problems thus far.

Good luck!
Jeff Payne June 29, 2011 at 8:05am

Both need to co operate regardless of what the divorce decree says. He may be able to get away with just his fianancials though, Important part is that you need both to sign the listing, contract and then closing papers.
Abraham Walker June 29, 2011 at 7:18am

Hate to play devil's advocate but how could somebody want to stay in a home they can't afford?
Bryant Tutas June 29, 2011 at 6:50am

Richard. If they are both on the loan then both have to submit financials. He will not be able to stay in the house if they do a short sale. They will both have to cooperate. The divorce decree to mention what happens to the house.