Daughter getting divorced with upside down mortgage

by Greg
(Apple Valley, MN)

First of all, thank you so much for offering this service.

Our 30-year-old daugther will soon be getting a divorce. She and her soon-to-be ex have 27 years remaining on a joint 30-year mortgage on a townhouse. The remaining balance is $157,000. They are "upside down" because the home is only currently valued at about $110,000. I don't know what the interest rate is on the mortgage.

The ex is willing to walk away and our daughter would like to remain in the house. We have offered to provide her with $500/month to help make ends meet. However, her lender says it is unlikely that she will qualify to take on the mortgage on her own because her income is $32,000/year. Plus, her lender says the $500/month we can provide will not count as income as far as mortgage qualification is concerned.

Can you suggest any solutions?

=====ANSWERS=====

Hello Greg,

Thank you for stopping by and asking your questions. Also I always appreciate commendations for my work. This website is provided FREE of charge to help people out.

Your daughters situation confuses me. Does she plan to refinance the home to get the ex-husband off the mortgage? How does the lender even know there is a divorce going on?

I'm not giving legal advice here because I'm not qualified to do so. But I can speak from personal experience.

My first wife divorced me over 30 years ago. At the time we owned a home and she was on the mortgage with me. Our divorce papers required that she quit claim the home over to me in exchange for a equity payment.

So legally she was no longer obligated on the mortgage since I bought out her interest in the home. I did not refinance the home and just continued making the payments and the mortgage company never knew what was happening. I really do not know if this quit claim deed was sent to the mortgagee but it was recorded at a county level if I recall.

So I stayed in the home several more years and later sold it without any problems.

You and I both know that laws vary from state to state. You will have to seek professional help on this, but I imagine your daughters lawyer would be in the know.

So if this were to work out, you could supply her help to make the payment, the lender would not have to be involved.

I do not know if this would work in your daughters case but it at least deserves an investigation.

Hopefully this helps,

Jeffrey Ragan