Mortgage advice

[CottageFarm]

Here is the scenario:

74 year old woman, retired, recently divorced.
Her name is on property deed but current mortgage is in husbands name only. Wife retains home in settlement but must take out new mortgage to pay off balance (approx 50% - 60% of value) of current mortgage to remove husbands liability for the debt. Does she have any options other than a conventional mortgage? Are most banks/credit unions likely to require a co-signor since she is not working?

 

[skyhightree1]

Here is the scenario:

74 year old woman, retired, recently divorced.
Her name is on property deed but current mortgage is in husbands name only. Wife retains home in settlement but must take out new mortgage to pay off balance (approx 50% - 60% of value) of current mortgage to remove husbands liability for the debt. Does she have any options other than a conventional mortgage? Are most banks/credit unions likely to require a co-signor since she is not working?

I am not in the mortgage business but I would imagine depends on how much income she has and the cost to buy the husband out. Does she have other collateral not tied to the house to use if need be? There may be first time home buyer programs available to her that could help.

 

[CottageFarm]

Thanks sky, she has the retirement income to pay a mortgage, but I know for some loans they still want a buyer to be "employed". Co-signators aren't a problem, just know she would refer to not have to. She also has at least 40% equity, (likely 60-70 % when we're done working on it) so additional collateral shouldn't be an issue either. Just wondering if she has any other financing options other than conventional mortgage. Know there a couple mortgage banker folks on CT.

 

[Jogeephus]

If I follow you correctly, let's say the house is worth $100,000 and $60,000 is owed on it so she has $40,000 in equity in the home. Assuming there are no other liens on the property I'd loan her the money in a heartbeat if I were a lender. They can't lose. Only one who could lose would be her if she didn't make the payments.

 

[TN Cattle Man]

CottageFarm... I'm by no means in the banking world, but I do have a couple of questions. Is ex-husband looking to get paid or does he just want out by removing his name for liabilities sake? If it is the latter, why doesn't he just quick deed it over to her?

It is none of my business, but does a 74 year old retired woman really want to start over with a Mortgage??

 

[CottageFarm]

Thanks, TNC. Does she want to? No. She doesn't have much choice for the moment. Ex husband already got cash from her 401k as equalization, but he still wants his name off mortgage. I think it's actually better that way anyway. SOB can't or back looking for more later.
He will be signing a quit claim, but that alone wouldn't remove his liability for the mortgage.

 

[CottageFarm]

If I follow you correctly, let's say the house is worth $100,000 and $60,000 is owed on it so she has $40,000 in equity in the home. Assuming there are no other liens on the property I'd loan her the money in a heartbeat if I were a lender. They can't lose. Only one who could lose would be her if she didn't make the payments.

That's what I figure too, Jo. Mkt value will be 140-160k when we're done with updates. Current mkt is 115-125. Payoff is about 68k. She seems concerned about qualifying on her own, though it seems a no brainier to me. Was just thinking there might be clever options to a new origination that I'm not aware of.

 

[backhoeboogie]

Most banks love to make loans. Talk to them. They are always asking me to make a loan.

TexasBred was in the business. Not sure what state the house is in, but that makes a difference. There are different rules in different states. What's applicable to me may not be applicable there.

 

[CottageFarm]

Yeah, state does make some difference. This is Florida, so not my area either. Divorce laws are certainly a bit different here

 

[J&D Cattle]

I am a lender by day. Sounds like her loan to value will be great which is a huge plus and might help if she has any other shortcomings. The banks will still look at her ability to repay or her income as well as her credit. We are a small community bank and retirement income would be enough for us, wouldn't have to have an 8-5 job. We would not require a co-signer if repayment and credit were adequate.

 

[SJB]

i am in the same business as J&D. we would look at it the same way. income is income. we don't care if it's from an annuity or an engineering job.

 

[Brute 23]

The house needs to be sold and split up just like the 401K or what ever cash there was.

Its not surprising that no bank wants to make that loan. Its a disaster waiting to happen.

 

[CottageFarm]

How so brute??
Fwiw, I disagree about both the 401k and the house. The only reason she had to give him part of her 401k is because he's an asshole who spent all of his own money on toys while my mother actually was smart about saving for her retirement. However Florida doesn't see it that way.

She will sell the house, but doesn't need to do it immediately. Shes just required to get the original mortgage closed out and his name removed by Sept 1


Sorry...sore spot... I'm pretty seriously p'd off right now

 

[CottageFarm]

Thanks J&D and SJB. I read to her your comments and it pleased her.

 

[Brute 23]

This is by no means her fault. Her husband is getting the better end. He is walking away with cash free and clear. Her "cash" has a lean "mortgage" against it.

He should share in that risk.

There may be more to the deal but from what you have said it sounds like it is definitely in his favor.

 

[JMJ Farms]

Joe is right. Most any lender will jump all over that deal. Also it can, and probably will be, treated as a refinance rather than a purchase transaction. Which simplifies the process. I don't forsee her having any problems based on the information provided and rates are super good. I wish you and her the best.

 

[presmudjo]

Are you a credit union member? If her credit is good, she will most likely get the mortgage. The only draw back could be is if it is a manufactured home. After so many years, no one wants to mortgage them at a decent rate. Once you start mortgage shopping, you need to do it within a 30 to 60 day time frame, otherwise it brings down the credit score. I would get the free credit reports and pay for the credit score portion to know what is out there before you start mortgage shopping. I am in Florida and divorce is really weird here. She should be happy they didn't say he has a right to live in the house until refinance or sold. They do that alot here nowadays. I personally know if 2 families they did that to.

 

[presmudjo]

I wouldn't worry about the deadline either. If the courts inquire, all you do is show that you are working on getting a mortgage.

 

[CottageFarm]

Yes, she is a member with a couple of credit unions and USAA may also be an option for her, though I was surprised to see their rates a tick higher than the credit union.

I know she has some leeway on the deadline, but the stipulation is that she refi or he can force the sale of the house.He and his lawyer are already hounding her about it. She got screwed on everything else, but I can help make some of it back on this house, we just need some time for renovations and she needs time to acclimate to her new situation.

 

[TexasBred]

Thanks, TNC. Does she want to? No. She doesn't have much choice for the moment. Ex husband already got cash from her 401k as equalization, but he still wants his name off mortgage. I think it's actually better that way anyway. SOB can't or back looking for more later.
He will be signing a quit claim, but that alone wouldn't remove his liability for the mortgage.

Guess I don't really understand her concern about his still being responsible for the mortgage. I can guarantee you HE is not going to make any payments so it's not big deal especially since the deed is already in her name, the divorce has been settled and I assume she received sole ownership of the property subject only to the lien against it. Being on the note does not give him any priviledges, only remaining responsibilities to see that the payments are made. No need to spend a lot of money when it's not necessary but if she insists I'm sure about any bank would loan her enough to pay off the existing loan from the proceeds of a new loan in her name only. They would be very well secured.