Archive for June, 2012

Divorced But Still Responsible for Your Former Spouse’s Mortgage? Good News, If You’re Looking for a New Home

Friday, June 15th, 2012
article from Bankruptcy Law Network

It’s common for a divorce decree to award the marital home to one spouse or the other, with the spouse who is keeping the home being ordered to continue the mortgage payments until the mortgage is fully paid. However, this raises the question of whether the now “homeless” spouse can qualify for a mortgage to purchase a new home, even while that spouse continues to be liable for the mortgage payments on the former home.

Often, this problem is addressed in the divorce decree with a provision requiring the spouse who is keeping the home to refinance the entire mortgage within a short time after the divorce. Many times, though, the divorce decree is silent on this question, and the mortgage may remain an obligation for both spouses long after the divorce is finished.

The good news is that HUD Regulation 4155.1 4.C.2.f, which governs FHA mortgages, addresses this common scenario. This regulation states that the contingent liability of the ex-spouse for the future payments due on the mortgage on the home now owned by the other spouse is not be counted if the loan was foreclosed

Divorce is not considered an extenuating circumstance. An exception may, however, be granted where a borrower’s loan was current at the time of his/her divorce, the ex-spouse received the property, and the loan was later foreclosed.

Note: The inability to sell the property due to a job transfer or relocation to another area does not qualify as an extenuating circumstance.

Carolyn Secor is a Clearwater bankruptcy attorney and Clearwater foreclosure attorney serving Palm Harbor, New Port Richey, Oldsmar, Tarpon Springs, Seminole, St. Petersburg and the Tampa Bay area.

If you would like more information on our practice, please consult our website at:

www.bankruptcyfortampa.com
or call (727) 254-1704.

Don’t Get Stuck With A Surrendered Home After A Bankruptcy

Friday, June 1st, 2012
article by
Eugene Melchionne

There is a way to avoid getting stuck with real estate after a bankruptcy, but it all depends on where you live.  Unfortunately, this requires understanding a fine distinction in real estate law theory.  Stay with me folks, even a lot of lawyers missed this one in law school, but it is not so difficult to understand.

When you get a mortgage to buy or refinance your home, you give the lender a lien on the property as collateral.  That’s easy enough to understand.  Just like getting a car loan, the lender wants something to assure that you will repay the loan.  Fail to pay and the property gets repossessed.  In real estate terms, it is called foreclosure.

However, depending on how the law of mortgages developed in your state, there are different architectures for the mortgage loans.  The common theory is the lien theory  Just like with car loans, the mortgage is a lien on the title to your house and the lender can repossess it.  A foreclosure is required in order to fix the title in the lender.  But in some states with a deep connection to Merry Ole’ England, the theory is different.

In those states, mortgages are not a lien on the title to your house, you are in reality giving the title to your home to the lender only with a right to get it back when the  loan is repaid.  This is more akin to a pawn broker.  You give something of value to the pawnbroker and he gives it back when your repay the loan.  In  title theory states, the lender already owns your house and all you have to do is give up the right to get it back.  This is called the right of redemption.  While you cannot force a lender to foreclose, you can eliminate the need to do so.  Since you have given up the right to get the property back, there is nothing to foreclose.  The lender is now the owner.

Now procedures can vary from state to state in Bankruptcy Court so the most important part is to find an experienced and knowledgeable attorney to help you through this process.

Carolyn Secor is a Clearwater bankruptcy attorney and Clearwater foreclosure attorney serving Palm Harbor, New Port Richey, Oldsmar, Tarpon Springs, Seminole, St. Petersburg and the Tampa Bay area.

If you would like more information on our practice, please consult our website at:

www.bankruptcyfortampa.com
or call (727) 254-1704.