mortgage

Split from wife but can't shake mortgage

Don TaylorDear Dr. Don,
My ex-wife was ordered to refinance our home that she received in our divorce settlement. She had five years to do so but couldn't get it done because of her bankruptcy. This is an FHA loan carrying an interest rate of 7.375 percent. In addition, she received the deed and title.

Is there a way that I could have my name removed from the mortgage without refinancing? Secondly, are there any programs to help my ex get the refinancing completed? This process is causing financial pressure for me and also doesn't help my credit.

Toy bride and groom with ripped divorce decree © zimmytws/Shutterstock.com

Thanks,
-- Jim Juncture

Dear Jim,
Lenders can offer a release of liability. It typically would be subject to your ex-wife's income, as long as the credit rating meets their loan underwriting standards. At the same time, the lender isn't likely to be willing to take your name off the note and leave your financially challenged ex-wife with sole responsibility of repaying the mortgage.

FHA loans are usually assumable with lower credit requirements than a conventional mortgage. Unfortunately, the assumed loan would remain at the above-market rate. If she qualifies for such a loan assumption, she might qualify for an FHA-streamlined refinancing including a lower interest rate.

You didn't mention what the home is worth or how much equity is in the home. An immediate solution that comes to mind would be to sell the home. If proceeds from the sale pay off the loan balance, then you'd accomplish your goal of being relieved of the mortgage burden. Whether you have a legal right to force the sale after your ex-wife missed the refinancing deadline is something for you to discuss with your attorney.

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