Divorce - Mr. Cooper - Assume Mortgage - Maryland?

Question

For reasons that makes less sense now, we bought a few properties in her name only (deed & mortgage) but split all costs. Now we're divorcing and splitting the properties. As I'm not on any mortgages currently, how would I change that without more than doubling the great interest rates we currently have?

thank you!

Don Konipol · Answer

IF the parties trust each other and are financially sound, you can sign an unrecorded contract assuming all liability for the subject properties. While your ex can be sued by the lender should you default, and will be liable, she will have recourse to go after you.

Andrew Postell · Answer

@Brian Lewis if the mortgage is assumable...then yes, you could assume it. You'll need to reach out to the servicer with this question. If you aren't on the note, then you'll either need permission from the borrower on the note (in writing and filed with the servicer) or have the borrower on the phone with you when you speak with them initially. If the loan is assumable the service company will tell you how to qualify for that loan.

Secondly, you could still own the property and keep the current borrower on the mortgage (like a "subject to" transaction)...as long as your divorce decree says this is ok. If your decree states that you are to remove the current borrower from the debt - then you are required to do just that....which means either assuming the loan if the loan is assumable or refinancing.

Hope that makes sense how I am describing these things.

Doug Smith · Answer

That's going to be a tough one. I actually serve as an expert witness in foreclosure cases and one attorney I work with is a divorce attorney. One of the big issues that I always heard as a banker is "the judge says my spouse is not responsible for the payments". Regardless of what a judge says, you are still on the hook. I've done expert witness work where the spouse that was "no longer responsible" all of a sudden had a foreclosure howing up on their credit report. One spouse assuming the payments while the other is on the mortgages is a bad idea. I realize the rates are lower, but if she's smart, she'll make you refi it or sell it and split the $ appropriately. You might not care, but she would be wise to not "sub to" it to you. All things end badly otherwise they wouldn't end. I've just seen too many arrangements where one spouse stays on a mortgage when the other spouse gets the property through the divorce explode in a bad way. For you, getting a "sub to" or land contract deal with her would be the best outcome. For her, forcing you to refinance/purchase it or sell it and split the proceeds appropriately would be the smart play.

Divorce - Mr. Cooper - Assume Mortgage - Maryland?

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