3 Advantages of a Diverse Divorce Team

A professional divorce team has a range of team players including the attorney, financial planner, accountant, appraiser, mediator and yes, a divorce lending professional. Every team member has a significant role ensuring the divorcing client is set to succeed post decree.

Diverse skills allow the divorce team to think about a specific problem in a different, and often more strategic, way. By being able to look at a problem from different angels and draw on a wealth of experience and knowledge from all team members, allows for innovative and creative solutions.

 1 – Diverse Teams Fill In The Knowledge Gap | The reality is that no one knows everything. Teams solve problems faster when they’re more cognitively diverse.

2 – Diverse Teams Fill In the Perspective Gap | Perspective is the capacity to view or think about a situation or problem in a wise and reasonable way.

3 – Diverse Teams Fill In the Experience Gap | Experience mostly comes through time, but...

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You're Awarded the Marital Home But Not on the Mortgage - Now what?

So, what now? You were awarded the marital home in the divorce but you’re not currently on the mortgage. How do you work with the Mortgage Holder going forward?

Assumption & Release of Liability | When a former spouse assumes ownership of the home and the mortgage, this does not always mean the mortgage lender will release the original borrower from their financial obligation or liability on the mortgage. A loan assumption is a transaction in which a person (the “assumptor”) obtains an ownership interest in real property from another person and accepts responsibility for the terms, payments ,and obligations of that other person’s mortgage loan. The assumptor is liable for the outstanding obligations and unless a release of liability is requested, the original borrower will remain liable as well.

Successor Homeowner’s Right to Information | Another sticking point for divorcing spouses who are awarded ownership of the marital home and who...

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Avoiding Language Traps in the Divorce Settlement Agreement

Avoiding Language Traps in Divorce Settlement Agreements That Could Affect Your Ability to Obtain Mortgage Financing.

We know it is important to be very mindful of the words used in a divorce settlement agreement in order to avoid any language traps and future conflict. Word choice can have an effect on the divorcing client’s ability to obtain mortgage financing as well. While it may not be top of mind to word the divorce settlement agreement to meet mortgage guidelines, it could significantly help divorcing clients to clarify certain terminology used in the settlement agreement.

The terms “alimony”, “maintenance” and “spousal support” are often used interchangeably to describe payments made by one spouse to another after a divorce. The terms may be identical in meaning but not necessarily in the eyes of an underwriter.

As an example:  From a liability/debt perspective, FHA guidelines differentiate between alimony and maintenance while...

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What Divorcing Homeowners Should Understand When Refinancing the Marital Home

Uncategorized Aug 25, 2020

Divorce is messy as it is. Throw in the recent changes within the mortgage industry and it may get even messier!

When a divorce involves refinancing the marital home, divorcing borrowers typically are looking to pull equity out of the home in order to buy-out the other spouse’s equity ownership. Although the divorce settlement agreement may outline the details of the transfer of ownership, it does not determine what type of financing is available for the divorcing borrower.

The two types of refinances are either a Rate/Term refinance or a cash-out refinance. Rate/Term refinances typically have better terms with regards to lower interest rates and access to more equity. A cash-out mortgage, on the other hand, may carry a higher interest rate and typically only allows the borrower to access up to 80% of the home’s value, which can present a problem when the goal for the refinance is to actually access the equity, right?

In 2019, roughly 13% of homeowners with loans...

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Managing Credit Card Debt During Divorce

Under today’s economic conditions, especially with the job losses we’ve seen lately, many lenders and investors are choosing to raise minimum credit score requirements in an effort to minimize the risk of borrowers not being able to make their payments.

For now, the change in credit score requirements is simply a protection against default during a rough time in our economy. It’s uncertain as to how long the increased credit score requirements will last. But many of the big benefits of each loan program remain, while interest rates are still sitting at historic low levels.

Not only can divorce lead to emotional strain, but it can also cause all sorts of financial problems. All those shared accounts and co-signed loans that once seemed like a great idea are now the cause of major issues.

Don’t assume your clients will play nice and don’t assume they fully understand what happens with their credit during the divorce process. When joint credit is obtained,...

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Is a Reverse Mortgage Right for Divorcing Homeowners?

Is a Reverse Mortgage Right for Your Divorcing Homeowners?

Divorce has declined in the US for everyone except couples over the age of 50, whose rate has doubled since 1990.

Divorcing later in life is not a new phenomenon, but it is becoming more and more common. Indeed, the increased occurrence of “gray divorce,” as it’s called, has been identified as a significant 21st century divorce trend. Even though the overall divorce rate is actually declining, it’s on the rise among older generations.

Reverse mortgages were created specifically for senior homeowners, 62 years and older, who want to convert part of their home’s equity into loan proceeds. With not only the rising financial requirements of senior homeowners but when there is limited or fixed income in a divorce situation, reverse mortgages are becoming a popular option and tool to supplement income.

How can a reverse mortgage help your divorcing clients?

Flexible Payout Options can be a great...

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The Need for an Equity Buyout Preapproval in a Divorce

 

Obtaining mortgage preapproval to purchase a new home has been common practice for many years. A preapproval shows the home seller that the buyer has the financial strength to obtain mortgage financing to successfully complete the purchase transaction. The mortgage purchase preapproval is one of the first steps required for homebuyers and it should be one of the first steps for a divorcing spouse before agreeing to refinance the marital home.

Equity Buyout Preapproval should also be required by the spouse retaining the marital home if new mortgage financing is required. A refinance due to a divorce is required to remove the vacating spouse from the current mortgage or when the in-spouse needs to buy the equity ownership from the out-spouse in cash form.

  • An Equity Buyout Preapproval allows the Certified Divorce Lending Professional (CDLP™) the ability to account for all income requirements, joint and individual debt, and assets needed to successfully provide mortgage...
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The Value of Perspective During Divorce

 

Have you ever given thought to the value of perspective that each member of the professional divorce team brings to the table?

Every divorce is different. Each having it's own set of assets, emotions and narrative. The strength and knowledge of each professional involved can have a major impact on the outcome.

Perspective is a way of regarding situations, facts, etc., and judging their relative importance. Perspective is the capacity to view or think about a situation or problem in a wise and reasonable way.

Certified Divorce Lending Professionals (CDLP™) have a completely different perspective when looking at a divorce settlement agreement and participating in the actual settlement or mediation process. CDLP™s don't just look at the divorce settlement agreement and how it applies to the borrowing spouse's mortgage application. They have a much wider viewpoint and understanding of the entire process - a deeper and stronger perspective of the overall impact divorce...

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The Importance of Basis When Selling the Marital Home in Divorce

 

Divorcing Homeowners who are selling the marital home should understand the importance of Basis. The Basis of the property is usually the acquisition cost and may be an important number when calculating any capital gains on the sale. The cost is the amount paid in cash, debt obligations, other property, or services. In addition to the cost of the property, certain other fees and expenses become part of your cost basis.

Real Estate Taxes. When the marital home was purchased, if the buyer paid real estate taxes the seller owed on real property acquired and was never reimbursed by the seller, taxes paid may be treated as part of the Basis. This amount should not be deducted as taxes paid. If the seller paid real estate taxes on behalf of the buyer and was reimbursed, the amount is usually deducted as an expense in the year of the purchase and should not be included in the basis of the property. If the seller was not reimbursed, the amount paid by the seller must be reduced from the...

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Income from Divorce and Mortgage Financing

Uncategorized Jul 14, 2020
 

Divorce and mortgage financing concerns are often a touchy subject in divorce situations. Particularly when one spouse is dependent upon income awarded from the divorce for mortgage qualifying purposes and also when contingent liabilities are present, such as a jointly held mortgage on the marital home.

Having a basic understanding of how lenders look at the different sources of income awarded in a divorce settlement as well as how joint and contingent liabilities are handled can help you better serve your divorcing clients who are concerned with the ability to obtain mortgage financing post-decree.

Avoiding hurdles with mortgage financing in a divorce situation is easier when you have a better understanding of the potential challenges your divorcing clients may face when obtaining mortgage financing.

Income vs. Qualifying Income

Often times in a divorce and mortgage situation there are various types of income to consider: Employment Income; Alimony/Maintenance Income; Unallocated...

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