divorce impending - house in negative equity

[sfag]

Could someone give me a few pointers here.

I've a friend going thru a divorce. She wants to keep the house which is now probably in negative equity. Her husband is the co owner/mortgagee.

The 2 payments have been missed.
She will never be able to pay off the remaining loan on her own.
She is low waged and has a small child.
Nevertheless she wants to remain there no matter what.

If anyone has experience of this kind of thing can you give me some 'guesstimate' advice me on the following questions.



1. How quickly could a bank repossess the house if it wanted to - against her wishes - (they have indicated they will start proceedings after three missed payments)
2. Would a bank realistically settle for - say half the monthly payment for the forseeable future.
3. Can a judge award her sole ownership of house without the banks consent? (thus removing the husband from the debt - he is a better bet for the chasing of the payments than she is)
4. Are there debt/consumer help people out there who could help her negoitate with the bank over a reduced payment.

many thanks in advance.

 

[Dreamerb]

This should form part of the package of legal advice she is taking in obtaining her divorce.

In a divorce, a judge may make a variety of orders including what's known as "property adjustment orders" which *could* put the house in her sole name, and require the husband to make payments towards the mortgage / lump sum payments, etc.

If he's substantially better off than she, the judge may look more favourably on her case to remain in the family home; however, if he also doesn't have substantial income / other assets, the judge could well order the sale of the home and for one or both of them to share any remaining debt.

This is a more complex case than the usual "in arrears" issues and your friend may have even less control than many who have built up arrears. She should contact the lender and try to make some arrangement (maybe interest only) while the case is ongoing. She should also urgently consult her solicitor about whether it's practical to stay in the house and what she should do (setting out their relative incomes, assets and financial obligations to the best of her knowledge). And she should listen to that advice, even if it isn't what she wants to hear.

 

[mf1]

"The 2 payments have been missed.
She will never be able to pay off the remaining loan on her own.
She is low waged and has a small child.
Nevertheless she wants to remain there no matter what."

Thats madness. On the face of it it makes zero financial sense. No way will a Court grant her sole ownership unless there is a magic Lotto win between now and the hearing date.

As DreamerB says - unless the ex can support the mortgage, keeping the house is just not an option.

She needs to hear this from her own solicitor who knows all the facts and she needs to listen to that advice.

mf

 

[sfag]

thanks for the advice.

I had thought her solicitor would advise her on all of these matters but she claims this advice is not forthcoming.

All negotiations so far between his and her legal people revolved around the illusion that house was an asset. Like a lot of people around the folks involved don’t realise the true impact of the last few months financial events. I've seen the amount owed and the house is no asset. This changes everything.

When you think about it all divorce proceedings in living memory would have involved redistributing the equity left in the family home. This has now changed and the prospect of a growing debt that doesn’t disappear on the sale of the house must change the way settlements are arranged.

Regarding choice. I know what I would do (ie sell fast) but when all other choices leave you worse off the inclination is to stay put and try and negotiate a bank repayment that would leave her paying the same as rent – that way she keeps her home in which she has invested time and money.

 

[MrMan]

I would doubt the solicitors have taken a rose tinted look at the house and profess that it is worth more than it is, why would they? surely it has been valued anyway and the valuation updated again to todays market.

 

[mf1]

"I had thought her solicitor would advise her on all of these matters but she claims this advice is not forthcoming. "

It can be very difficult to get a message across to someone who does not want to hear it.

I have clients who say things like : we'll leave it up to the Judge, I'm sure it will be alright, surely a judge would not put me out in the street?, and on and on it goes.
In all of these cases, the clients have to educate themselves, and it actually is not rocket science. Assets, liabilities, income and outgoings, ages of parties and capacity to earn.
In broad terms, unless there is a lot of money, then a 50 /50 split of assets with maintenance for the child is a reasonable benchmark to work from. And if there are no assets? Then, no split.

Unless clients can understand simple economics, a solicitor is banging their head off a wall trying to tell them. They all have a friend of a friend who got everything - twice over!


mf

 

[Raskolnikov]

The husband and wife are liable for half the mortgage each. Would it be possible for your friend to pay her half (can she even afford this?) and the husband to pay half? Are the husband and wife on decent terms? Maybe it would be possible for them to share the house? If not, what about the prospect of having lodgers in to help cover the mortgage? What sort of negative equity are we talking about here anyway?

 

[Rigoletto]

Nevertheless she wants to remain there no matter what.

this comment is a nonsense. i understand your friend wants to keep their home and thats perfectly normal but it just isnt on given her circumstances.
all of the people who've ever had their house repossessed wanted to "remain there no matter what".

 

[sfag]

The husband and wife are liable for half the mortgage each. Would it be possible for your friend to pay her half (can she even afford this?) and the husband to pay half? Are the husband and wife on decent terms? Maybe it would be possible for them to share the house? If not, what about the prospect of having lodgers in to help cover the mortgage? What sort of negative equity are we talking about here anyway?

Only slightly into negative equity but looking ahead thats likely to increase.

I would have figured debt works differently than credit.
Ie: If there is equity and they both own it equally then its up to them to share it - 50/50 being the fairest.
But with debt - the debt belongs 100% to party A and 100% to party B. Surely the bank will chase who ever they think they can get the money off. Surely they wont be interested in how the debt is shared as long as they can get it. If I was a bank man I would chase both but be most interested in the surest bet and in this case its the husband as he is waged.

I cant vouch that she comunicates everything cleary with her solicitor or menatlly records all that her solicitor says with accuracy.

She doesent understand anything about money, loans and the insurance that goes with it (theres a lot of people like that!). She gave me a load of financially related letters to look at. Thats the first time she (I) realised things werent good and when I saw the 90% loan its clear the asset the parties were haggling over is now a debt. The house was bought 1 3/4 years ago at the height of the boom.

Very recent negotiations with he judge were based on a 6 month old optimistic valuation. Everything has changed since then. No one apparently has asked for a revaluation.

Theres a hundred grand spend on the interior (all mass production houses came with no interior when the boom was raging) . She seems to think this will mean the house worth more than the next.
The emotional (and financial) attachment to getting the house the way she wanted it means she wants to stay no matter what.

I think it will boil down to two things:
1. generally speaking how generous are judges towards single mums in these matters - the common expection is that they are favoured, and
2. how ameniable will the bank be to renegotiation of the much lower repayments. The bank is not Irish Nationwide.

If someone has recent knowlesge of similiar debt cases the outcome would give some indication as to how she should proceed.

 

[ivannomonet]

"I had thought her solicitor would advise her on all of these matters but she claims this advice is not forthcoming. "

It can be very difficult to get a message across to someone who does not want to hear it.

I have clients who say things like : we'll leave it up to the Judge, I'm sure it will be alright, surely a judge would not put me out in the street?, and on and on it goes.
In all of these cases, the clients have to educate themselves, and it actually is not rocket science. Assets, liabilities, income and outgoings, ages of parties and capacity to earn.
In broad terms, unless there is a lot of money, then a 50 /50 split of assets with maintenance for the child is a reasonable benchmark to work from. And if there are no assets? Then, no split.

Unless clients can understand simple economics, a solicitor is banging their head off a wall trying to tell them. They all have a friend of a friend who got everything - twice over!


mf

Fully agree.

The blinkered view of the world thats existed here in Ireland for decades that thinks just because your female your not responsable for your debt, and all judges should look down on you like a kindly grandfather figure, need to be kicked into touch. Unfortunatly it was very often true but things are slowly changing in that area , for the better in my opinion.

She cant afford it, simple as...Kids or no kids.