In foreclosure at date of separation


#1

My date of separation was on June 22nd 2012. During then the house was pending loan modification (pre-foreclosure). I left the house and he stayed. In July 14th 2012 papers were signed extending the loan modification. The loan was modified bringing it current in Dec 2012. Currently we have a hearing set for ADR and now he is stating that because the house was in foreclosure the equity in the house at DOS is not valid. Is this a correct statement?


#2

If both parties voluntarily increased the mortgage after the date of separation pursuant to a modification, then I would imagine that there is an argument that the increased loan value (and therefore decreased equity in the home) should be used when valuing the property for equitable distribution purposes.


#3

Hi Kathleen
Thank You for responding. The loan value never changed. It was stagnant, before and after DOS, while the bank was in the middle of doing the loan modification. The equity in the house at time of DOS is estimate of about 50,000, I’m going to get an appraisal to confirm that. He is saying because the house was in the middle of the loan modification, foreclosure as he likes to put it but not really sure if it really could be classified as that, that the 50,000 dollars would not be included for equitable distribution.


#4

If there is nothing that changed the value of the property after the date of separation, it would seem that the value of the residence at that time would be appropriate to use for equitable distribution purposes.


#5

So the fact that the house was in foreclosure/loan modification it’s still considered a marital asset?


#6

If the house is still owned by the parties, it is still a part of the marital estate. Whether it is an asset or a liability would be dependent upon whether the house is worth more than the mortgage.