Can anyone weigh in on what happens in a divorce when the family home is not worth what is owed on it?

Asked by Marcus, Las Vegas, NV Wed Feb 11, 2009

Divorce, family home, upside down

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6
Len McGuirk, , Las Vegas, NV
Thu Feb 12, 2009
Marcus,

I answered your question below, but I forgot to mention that I just recently went through a short sale with a divorce situation involved. It happened to be one of the easiest short sales I have ever accomplished. Feel free to contact me and I will let you know all about it.

Len McGuirk
Short Sale Specialist
Prudential Americana Group
Direct: (702) 203-6688
0 votes
The Ballen G…, , Las Vegas, NV
Thu Feb 12, 2009
Marcus,

We had a divorce short sale. Because of the divorce, the couple had to sell the home. They owed more than it was worth. We sold to to a buyer and the bank agreed to take a "short" on the payoff. Both parties moved on with their lives. Of course I agree with consult with an attorney, but if you guys want or need to sell, we can help with a shortsale.
0 votes
Nichole LaVi…, Agent, Las Vegas, NV
Thu Feb 12, 2009
Hi Marcus:

Bill is correct. This question will be best answered by your attorney. I would assume a judge could order the home sold if the parties cannot agree on a solution. But, if neither party wants to keep the home and agree to sell the property as a short sale (as opposed to letting it go to foreclosure and ruining your credit for seven years), you would not need to wait for a judge to tell you to put the house on the market.

Len is also correct in that your lender will consider your divorce a financial harship. My speciality is working with sellers that have negative equity and finding solutions to mitigate their losses. I can assist in negotiating with your lender to get your home sold. Also, I've been through a divorce myself so I understand how difficult this can be. Please give me a call if you want to discuss more details.

Best of luck,
Nichole LaVigne
702-544-4022
Prudential Americana Group Realtors
0 votes
Keith Sorem, Agent, Glendale, CA
Thu Feb 12, 2009
Marcus
When a home sis sold for less money than will pay off the loan(s) and the closing costs, it is called a "short sale". In order to conduct a short sale the lender(s) who "owns" the loan(s) has to be convinced that it is the right thing to do (as opposed to foreclose).

Part of that process is presenting the case, referred to as "hardship". Death, divorce, medical issues are often the primary reasons for a sale. Depending upon the amount of "short" in the sale, the lender may say yes or no. Because this is a divorce I would think that both attorneys should factor this into the settlement. I heard about one case in which the wife was allowed to keep the house in return for giving up her share of her husband's 401K.

Good luck. You are going to need a Realtor experienced in short sales if you need to sell.
0 votes
Bill Eckler, Agent, Venice, FL
Thu Feb 12, 2009
Marcus,

At this point, this is a question best referred to your attorney.

Good luck
0 votes
Len McGuirk, , Las Vegas, NV
Wed Feb 11, 2009
Marcus,

The family still has an option to short sell the home. This is to sell the home on the market for the current market value when it is worth less than the balance of the loan. A divorce would be a factor considered as a financial hardship. The homeowner's lender would have to agree to accept less than the total payoff, but they would possibly have a good chance of this because of the divorce.

I specialize in short sales. If you have further questions or if you are in this type of situation, please call me and we can discuss your situation more in depth. Hope this helps.

Len McGuirk
Short Sale Specialist
Prudential Americana Group
Direct: (702) 203-6688
0 votes
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