Divorce and Foreclosure

Divorce in most cases involves distribution of property between spouses.Homes too are affected during this time and this occasionally brings out confusion on what to do and how to handle a mortgage and whether it should be sold or will be foreclosed or not. The spouses also deliberate on issues of saving the mortgage from foreclosure in post-divorce should any of the spouse intend to keep the home.

Initially when the parties purchased the property, theysigned important documents to complete the transaction and live in the home. The documents arethe mortgage and promissory note, thus both of parities signed or the property is signed by one person and ownership of the mortgage is placed under him or her can make a difference on the decisions the parties make.

After a foreclosure occurs on a mortgage that is signed by joint owners who later divorce or are seeking divorce then the couple will be both held responsible for repaying the debt when the house is sold at foreclosure and a deficiency judgment after a foreclosure procedure remains. The deficiency judgment will require the debtor to pay the lender the deficiency which the what is owed under the mortgage plus costs such as foreclosure costs and attorney fees. Since the mortgage is under joint ownership of the spouses, both of them will contribute towards payment of the amount required unless they file for Bankruptcy.

The mortgage can also be signed under ownership of one of the spouses and when the couple divorce that home might be subjected to foreclosure, which can attract a judgment of deficiency making the spouse who signed the mortgage and promissory note and assumed ownership of the property to carry the full responsibility of paying for the delinquency judgment.

Divorce might not be accompanied by foreclosure of the property, mostly when one of the spouses prefers to remain in the home which previously was owned by the couple. To avoid foreclosure then, the spouse who wants to stay in the home can seek to assume the loan or apply for a refinancing of the mortgage.

When the spouse seeks to assume the loan he might be faced with a difficulty when the home is under a due on sale clause which is usually applied to many mortgages in Massachusett,s although he/she might be entitled to retaining the home.

Mortgages can still be subjected to foreclosureafter the divorce between the spouses and the foreclosure can affect both partners even long after divorce usually when they both signed joint ownership of the home, then one spouse remained in the home after divorce and failed to make the monthly payments for the mortgage yet the mortgage was not subjected to refinance or assumption of the loan by the spouse who chose to remain in the house. Both ex-spouses will be held liable and will pay any deficiency fees for the mortgage after foreclosure.

To avoid foreclosure even after divorce, alternatives can be sought like selling the property and paying off the debt to the lender or renting the property and converting the rent income to monthly payments for the home or arrange a short sale with the lender if they agree.