I'm assuming your decree did not address what would happen if the mortgage defaulted or otherwise had a liability on it. Whether a short sale will require payment by your husband or you depends on the nature of the short sale. You must require that you be consulted and agree to any terms ahead of time. Further, if he expects you to pay, then you'll have to go back to court and obtain an amendment to your decree.
This answer is not to be considered a response to a specific legal issue in a specific jurisdiction - it is to be considered only a general response to a hypothetical scenario posed by the questioner. For specific legal advice, please consult with a licensed attorney in your jurisdiction.
As you know, you face potential liability because you signed the mortgage and note. Since the mortgage holder is not a party to the divorce, its rights are not affected by the judgment. In a short sale, the mortgage holder can look to any mortgagor to pay the difference between the sale price and the amount owed.
Are you on good enough terms with your ex to discuss this with him? Can you have him and the mortgage holder "keep you in the loop"? It is probably in your best interests to have a lawyer who has handled short sales help you with this, or at least advise you and be available as necessary until the sale is done to your satisfaction.
You should not rely on this answer. You should consult a lawyer so you can tell the lawyer the entire situation and get legal advice that is precisely tailored to your case.
As previously stated, the bank is not bound by any agreement arising out of your divorce case that was made or even made part of the Judgment of Divorce. The bank loaned the two of you money, so you are still contractually obligated to pay the mortgage or any deficiency that might arise from a short sale. The mere fact that your name may have been removed as one of the owners of the property by signing a quit claim deed does not relieve you of your responsibility to the mortgage company. Your willingness is not relevant, since you have still have a legal/contractual obligation by which you are bound.
Before the economy/housing market hit rock bottom, mortgage lenders would generally bid what they were owed, plus costs expended, just to get title to the home and then resell it (assuming there was not a 2nd or 3rd mortgage). Today that is not the case. Lenders have the right to pursue any deficiency against the borrowers. Additionally, a lender can send borrowers a 1099 for the deficiency, and the amount of the deficiency would then constitute income (write-off of a bad debt) to be included on one's tax return.
I would contact a tax attorney or real estate attorney to get advice about your potential liability and the status of a federal law that may preclude a lender from issuing a 1099 this year. I believe lenders are precluded until the end of this year from issuing the 1099. Again, check with a tax or real estate attorney in your community.
Neil M. Colman
Mr. Colman is licensed to practice law in Michigan. The response herein is not legal advice and does not create an attorney/client relationship. The response is in the form of legal education and is intended to provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that, if known, could significantly change the reply and make it unsuitable. Mr. Colman strongly advises the questioner to confer with an attorney in your state in order to ensure proper advice is received.
The specific language in your divorce judgment will be relevant regarding your rights and obligations vis a vi your ex-spouse. The judgment of divorce, however, cannot force the bank or government to not go after you for deficiencies or taxes, respectively.
That being said, you should carefully review the entire judgment and make sure that there is a provision providing terms holding you harmless from liability and whether the specific obligation of your ex to be responsible for the mortgage payments is a domestic support obligation. This may assist the family law judge in binding your ex to reimburse you and may also be a debt to him that is not dischargeable in bankruptcy. The judge may be able to do that by way of a spousal support order.
Hindsight is 20/20, but you probably did not want to sign over your rights to the home until the home was refinanced and the debt not in your name. Of course, that may not have been possible in your case if there was no way the home could have been refinanced, or if you and your husband agreed that you would sign over your rights to the home despite still being on the mortgage.
There are facts that may be missing in the scenario you provided, so you should not rely on these recommendations. You should provide a copy of your divorce judgment to a divorce attorney and discuss the terms of your divorce judgment to see what your options are, what you can expect, and what you should plan for. If y
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