The Role of a CDLP as a Financial Neutral

Oct 30, 2020

One of the most important team members in the collaborative divorce process is the financial neutral. The financial neutral is an impartial expert in his or her field. When a primary asset of the marital property is the marital home and other real estate assets, having a Certified Divorce Lending Professional (CDLP) as a financial neutral on the divorce team becomes increasingly desirable. 

In many divorce settings, negotiations break down over financial issues or concerns, oftentimes leading to litigation. The CDLP, as a financial neutral, offers both parties a balanced, thorough financial evaluation of the current mortgage and future mortgage financing requirements and offers realistic solutions to obstacles in negotiations. 

Depending on each individual situation, the CDLP can perform a variety of functions in a collaborative divorce, such as:

  • Assisting with the collaborative process by offering solutions and needs for both spouses to obtain immediate and future...
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Reverse Mortgage and Divorcing Seniors

Oct 26, 2020

Reverse Mortgage and Divorcing Seniors

A reverse mortgage is a type of loan that allows homeowners to borrow money against the equity in their homes. Reverse mortgages enable homeowners to tap into a line of credit or receive from a lender a fixed monthly payment that can help them pay off debts, make upgrades to their property, manage large expenses, or supplement their retirement income.

Divorcing clients over the age of 62 may have the option of utilizing a Reverse Mortgage for an Equity Buyout and keeping the home. Not only may a Reverse Mortgage be a viable option for divorcing clients who want to remain in the marital home; it may be a wise financial planning decision as well. Taking a reverse mortgage can also have implications on the tax bill, and for configuring potential Social Security income. You may be able to limit the income tax exposure by using cash flow from a reverse mortgage, rather than taxable withdrawals from a 401(k) or other retirement investment, to pay off...

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I Can't Buy a New Home if I'm Still on the Marital Mortgage!

Oct 19, 2020

“I can’t buy a new home if I’m still on the marital mortgage!” is often the statement made by the spouse leaving the marital home. Unfortunately, this isn’t necessarily true.

In many divorce situations, the spouse retaining the marital home won’t qualify to refinance the current mortgage and the vacating spouse believes they can’t qualify to purchase a new home while remaining on the mortgage for the marital home.

This thought process seems rational; however, there are certain steps and verbiage to include in the divorce settlement agreement that can remove this obstacle. While many mortgage companies have their own guidelines or ‘overlays’ to investor underwriting guidelines, a Certified Divorce Lending Professional (CDLP) will know how to handle Court-Ordered Assignment of Debt and the correct verbiage needed in the divorce settlement agreement or separation agreement.

When a borrower has an outstanding debt that was assigned...

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QuitClaim Deed vs. Warranty Deed

Oct 05, 2020

The basic understanding of the various real estate deeds is a must when transferring title and ownership to real estate during a divorce situation.

A real estate deed is a legal instrument (document), almost always in writing, that passes an interest in real estate from one person to another person. In short, when real estate is sold or given to someone, it is done with a deed. The new owner of the real estate receives their rights to the property and any title warranties transferred by the previous owner from the deed.

The deed is the most formal type of private instrument and requires not only an executing party (grantor/grantee, transferor/transferee) but also witnesses as signatories, and acknowledgments from a notary public. A deed has, therefore, a greater presumption of validity and is less rebuttable than other types of real estate documents.

Understanding the Quitclaim Deed

The quitclaim deed is a type of legal document used to transfer interest in real estate from...

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Refinancing the Marital Home When You Don't Live There

Sep 27, 2020

Many times in a divorce situation, one of the parties may not be living in the marital home at the time of the divorce; however, is awarded the marital home through the divorce settlement agreement or perhaps one divorcing party is awarded an investment property that will now become their primary residence.

A borrower who is currently on title for the preceding 12 months does not have to also be living in the subject property and may qualify for a Limited Cash Out Refinance without a reduction in loan to value requirements as long as they can show:

  1. They have paid the mortgage for at least 12 months, or
  2. They can demonstrate a relationship with the current obligor (relative, domestic partner as an example) and can document they were awarded the property through divorce or legal separation.

This may open up an opportunity for divorcing homeowners who also own investment properties. When their intent is to occupy a previously held investment property post-divorce, they...

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3 Advantages of a Diverse Divorce Team

Sep 14, 2020

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?

Sep 07, 2020

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

Aug 31, 2020

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

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

Aug 17, 2020

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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