Dear Clients and Friends,
It’s common for one spouse in a divorce to keep the couple’s home and assume the mortgage. Typically, the spouse keeping the home will refinance the mortgage in order to remove the other spouse’s name, so the other spouse isn’t jointly responsible for the debt.
But what happens if the spouse fails to refinance? This happened in a recent case in New Jersey. An ex-wife was awarded the couple’s home with the understanding that she would refinance it within nine months. She failed to do so – and then made several late mortgage payments.
Because the husband’s name was still attached to the mortgage, his credit was damaged by the late payments, making it harder for him to get a mortgage on his own new home.
The husband went to court, and a judge granted him a power of attorney to list and sell the home. The court even gave him permission to evict his ex-wife if necessary to complete a sale.
This may sound like an extreme solution. But it should be noted that the husband could suffer additional consequences from the wife’s actions, beyond having trouble getting a mortgage. For instance, he could have trouble renting an apartment, because a landlord might be scared off by his credit rating. He also might find it difficult to buy or lease a car, and he might even have trouble getting a new job, because a lot of employers run credit checks on job applicants.
If you or a loved one have a family law question? I invite you to check in with us, at no cost, to see if we can of help. I look forward to hearing from each of you.
Have a great summer,
Best,
Ron