Legal question regarding mortgage during seperation/divorce


#1

I would like some advice regarding my situation. My husband and I are currently physically separated and intend on becoming legally separated shortly. He moved out about a month ago of his own choosing. We intend to become separated and eventually divorced. I am wondering what the best course of action is regarding our mortgage. He has stated that he does not want anything and would like me to be able to remain in the house. I can pay the mortgage payments on my own as they are right now. We have discussed refinancing the mortgage since the rates are currently low and we could get a lower rate that I could afford more easily but I am unsure how we will need to divide things legally. I don’t want to lose the money for closing costs when I’m going to lose the property (I can’t pay him the equity) or have to try to refinance in my name. What is my best course of action? Can his name remain on the mortgage and there be a document which states that I am responsible for the payments and when/if the property is sold I am the sole owner of the equity?


#2

You need to consult with an attorney. The fee for consultation and drawing up a separation agreement is usually minimal. This is to protect you both in the future. A lot can change in the year separation required for divorce so if he is willing to let you refinance the home, and does not want anything more from the marital assets, you should get it in a signed, notarized agreement now.
NC does not recognize “legal separation”. You are separated the date that one of you move from the marital home and you begin living separate and apart.
As long as it is not against the law, whatever you two agree on can be put into an agreement. If he is not concerned with the equity or other marital assets then it would be in the agreement that the home will be refinanced into your name and he can sign a quit claim deed so that he can be removed from the deed. The agreement would need to state that he no longer has any interest in the martial home or assets other than what has already been divided. The agreement would state that from specified date, (date of separation) you two will live as though you are not married and have no claims on each other.

With an agreement signed and notarized, then at the end of the separation requirement you or he can file for absolute divorce and it should be granted with little or no trouble.


#3

There is no legal separation in North Carolina, though you should try and separate your property and deal with spousal support issues now that you are separated.
Ideally the best way to do this is via a Separation agreement. It sounds as if you and your husband are getting along pretty well, so this is likely a viable option. If you chose to retain the home, a refinance will be necessary in order to remove your husband from the mortgage and to pay him his share of the equity.
In NC, all of the marital property is divided, with each party usually receiving one half the value. This is not to say that every asset has to be divided, rather all of the property (and debts) are totaled, and a tally is kept of how much each spouse receives so it can be equalized (by way of a cash payment if necessary.)
For example if you retain the home and it has has 100k in equity you would have to pay your spouse out 50k to make it even. If you had an investment account worth 150k in addition to the home, and your husband kept the account he would owe you 25k so that each of you walk away with 125k in value from a total martial estate of 250k.
If you cannot afford to buy your spouse out of the home, he can agree to waive the equity and not require you to refinance, these terms would need to be spelled out in the separation agreement.
I suggest you meet with an attorney to discuss the specifics of your case, and to have an agreement drawn up that meets your needs.


#4

I talked to my mortgage company today about something similar. My name is on the deed but not the loan. Apparently I have no financial obligation to pay anything, but I wouldn’t mind keeping the house. I make more money than the STBX and have made every payment on this house since we bought it. I told the mortgage company that they could either refinance it in my name or kick me out. Since the lending rules are so tight right now and I’m self employed, the odds of getting the loan refinanced are slim. Too bad for everyone involved because I’d like to stay and pay and the stbx can’t afford to keep the house.
p.s. I’m the wife.


#5

I hope that you got a positive response…
I think that there are more and more lenders beginning to work with the home owners. As long as you are paying the payments, I do not see where they would have a reason to kick you out. And you are also doing your stbx a favor by keeping the payments up and his credit good. It may be better for the refinancing to wait. As long as you are keeping the payments in good standing there should be no reason for your stbx to require you to leave the home.

Good Luck!


#6

You may keep the home without refinancing so long as your husband does not win a court action seeking to force a refinance.