Mortgage and Home Equity Loan

North Carolina Divorce Law Divorce and Separation Answers
1

My husband and I have agreed that he will stay in the home and be responsible for the payments on the mortgage and home equity loan. As he can not refinance on his own (property value dropped below total debt), we will be keeping the debt in both names and a quit claim deed will wait until he can assume the debt. In exchange for me being released from half of that marital debt, I have agreed to deal with the affects of the debt on my credit and give up the rights to any possible future equity.

What type of time deadline should we put on this agreement? And what would be the recommended clause at the end of the time limit? If he still can’t refinance, what do we do then? What if even then the house wouldn’t sell?

I know I am running the risk of him falling behind on payments or defaulting, thus impacting my credit even more, but it is the best solution we have been able to come up with.

Are we missing a better solution? Is there anything we should add to protect us both?

Are there any examples of legal terms we can use in this situation? I want to move forward with the divorce.

2

You can put any time limit that you feel is reasonable in the agreement. What is reasonable may depend on how much the negative equity is and how long it will take him to get the equity positive so that he can refinance.

You will need to include provisions for sale in the event that he cannot refinance. Those provisions should also contemplate that a sale may happen as a short sale or with the parties bringing money to closing.

For assistance with forms and drafting your own separation agreement, you should consider using Rosen Online.