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Divorced and Facing Default

August 4th, 2011, byMichelle Singletary

Q: I went through a divorce in the past year, and my house has gone to my ex-husband; so I am no longer on the title. However, I am still on the loan, and my ex-husband has been unable to refinance it due to the fact that he modified a loan he had on another house. Now he plans to default on the loan on the house that I allowed him to take in the divorce, and I am worried about my credit.

I am fortunate enough to have bought an owner-financed home that I am required to refinance in two years. I am worried about what my chances of refinancing will be when my ex-husband defaults on the loan. Is there anything I can do?

A: I would never have removed my name from the title while I still have responsibility for the loan. Never.

In fact, as part of the divorce, I would have required my ex to refinance to get me off the mortgage. But that is, as they say, water under the bridge.

I’m sorry to say there is little you can do except try to keep that loan current, and that might mean making the payments, so you and your husband don’t default.

You are right to be concerned about your credit. Missed payments, and certainly a default, will greatly impact your credit history and thus make it very difficult for you to refinance your home.

See if you can work with your ex to keep the mortgage current. Perhaps he can move and rent the house? Or, if you can afford it, maybe you can help with the mortgage until you can refinance.

Talk to your ex about selling the home so you can get rid of this obligation. Hopefully, the home is not under water. If it is (meaning you both owe more than the house is worth), maybe the lender will agree to a short sell. But, even a short sell will still hurt your credit.

In the end, with your name still on that mortgage, you are fully responsible for it. It’s not your husband’s loan, it’s yours and it’s his. And, it’s yours if they can’t collect from him.

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Last modified: August 4, 2011 at 3:59 pm