green house

SmartMoney has posted an article on MSN indicating that divorcing couples no longer want the family home.  This should really be of no surprise.  Given that homes these days are essentially losing investments laden with debt; what person really wants to come out of a divorce with a massive debt obligation on their hands?  This is the first time in a long time anyone has seen a bear market in housing.  To make matters worse, the house is the kind of debt obligation that is unique.  Unlike a bad stock that you can unload when the investment goes sour or a credit card which is an unsecured obligation, a mortgage is usually tied to one or two lenders.  The more lenders involved, the more difficult it is to get all parties cooperating; not to mention you still have to deal with the other divorcing party who may be hostile and not wanting to communicate about this.

The declining housing market is wreaking havoc with divorce rates and in trying to have clean divorce settlements.  The market itself just isn’t allowing homes to sell like the good ole’ days.  The MSN article alludes to giving advice such as “waiting it out”, “renting out the house” or considering a “short sale”.  What if none of those are good options?  The first two involve working with the other party in a divorce and the third involves receiving written permission from one or maybe two lenders.  This sounds all good but the bank is literally a big enemy where you have an underwater home and a divorcing couple. 

Bankruptcy issues are crossing over into family law in these types of scenarios.  I cannot provide any significant advice on this issue except to talk to your attorneys about this and one of them might in fact have to be a bankruptcy attorney in certain situations.  One thing is for certain, while deciding to divorce can be challenging; unloading the biggest debt a couple can have that is tied to a bank, lender or other third party, is even more challenging. 

Link to MSN Article:  http://articles.moneycentral.msn.com/Banking/HomeFinancing/a-recession-divorce-no-one-wants-the-house.aspx

For more information concerning this issue or others involving divorce and the marital home, consult with a San Francisco divorce attorney in your area. 



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