If you are divorcing in Florida in this current economic climate, like many, your house may be "upside down" on the equity to loan ratio or have what we are calling, "negative equity." That has happened one of two ways: either you bought between '05 and '07 when the housing market was at its highest or you took equity out of the home through a "home equity line of credit," and now the house is worth substantially less.
But what happens to that house and the negative equity in divorce? Generally, if your spouse has decided to keep the marital home, it could cause problems for you. Unless your spouse is able to re-finance that home, your name remains on the loan/mortgage for that home- even if you sign a Quit Claim deed. The Quit Claim deed only relinquishes legal title to the home, it does not relieve you from the financial obligation. Just because the home is now hers/his, does not release you from your original liability of the original mortgage you both took out as a married couple. Unless your spouse can qualify for a new mortgage, by way of a refinance, on his/her own, you will still be liable to the lender for the original mortgage on a home you do not own, if your spouse cannot or will not pay the obligation. In other words your good credit may be at the mercy of your ex. The next problem is that He/she may not qualify, so you have all the legal obligation to the bank without the legal position of owning the property.
Lastly, there may even be some equity in the house, but in order for you to get your portion of the equity, your spouse might not be able to refinance because the Bank's just aren't lending much anymore, because of the credit crunch. We have had some client's that just pay the other spouse their share of the equity of the house over a long period of time.
It used to be that divorcing couples would fight over which one of them keeps the marital home. Now couples are fighting over which one of them is going to take the marital home. Many of my clients are just letting the house go back to the bank. There is absolutely no benefit for them financially in keeping a home that is worth much, much less than is owed. However, from the lender's standpoint, nothing has changed because both partners are responsible for the mortgage. The only other alternative is a short sale to a third party. Should that occur the deficiency belongs to both of you.
If you are thinking about divorce in North Central Florida, please call us to talk your case. Visit our website or call the office to schedule your low-cost consultation. We employ a client based approach, which means that we are selective in the cases we take so that we can be available to our clients. We spend time with you to thoroughly understand the facts of your case, so that we can provide you with a comprehensive and realistic legal evaluation. Our process begins with a half-hour low-cost consultation, all of which is credited back to your account if we accept your case.
