Tough Housing Market Complicates Divorce

by Elizabeth Razzi Friday, August 15, 2008
provided by BankRate.com

Divorce is rarely an easy process. But falling home values and sluggish real estate sales are combining to make it particularly difficult right now.Couples aren't fighting over who gets to keep the house. They're scrambling to get away from the burden of it.

It's too soon to see the trend reflected in official statistics; the most recent marriage and divorce numbers compiled by the National Center for Health Statistics date back to 2005 -- just when real estate markets started to turn down from their boom years.
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"Richard says..."

This is a tough one on several levels but I will stick to the Real Estate issues. I am not Dr. Phil or Jerry Springer, which ever way things are working or not working out. If you are married and bought together in AZ it is usually community property. If you had a committed relationship and had purchased together with both names on the loan and deed, there were different ways to take Title. (Consult a qualified attorney for answers to your specific situation)

If one of you can keep the home and buy out the other with a promissory note and make payments to the other party, that is one option. You could rent it out or get a boarder for a while to help with the payments.

With the promissory note, it could be arranged through a Title Company with an escrow account. The advantages are that the ownership interest of the party that moved out and is receiving payments will be recorded and records will be kept. The parties never have to meet or mail a check directly to the other. When the other party is fully paid off, the quit claim deed is executed and recorded. The house was not sold and both parties benefited from it and did not have credit issues from a forced sale of the home.

Option 2 is to sell the house somehow. You may have to actually pay a check at closing to clear you existing mortgage loan, especially if there is no equity. There is the Short Sale option, which means that real financial hardship must be proved to the lender with financial statements, tax returns, budget records and more. A qualified Realtor that is experienced in Short Sales may be a valuable asset here.

Option 3 is to let it go into Foreclosure. That will greatly harm both party's credit scores and seriously hamper both financially in starting over. Give it careful thought here. Option 1 may work the best. Selling a home normally is an expensive proposition taking up as much as 11% of the Sale Price. That money could be put to better use in your respective pockets to assist both parties in moving on and rebuilding their lives.

To help you know what questions you should ask and how to arrive at the right answer for your specific situation, a FREE special report has been prepared by industry experts entitled "Divorce: What You Need to Know About Your House, Your Home Loan and Taxes". Read it today.

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That's all for now. I welcome you posting any questions or comments about this and any other articles on my Blog.

Have a Great Day,

Richard