Divorce and the Underwater House That Nobody Wants

I Want a Divorce

I Want a Divorce (Photo credit: Wikipedia)

As if it isn’t bad enough that a couple is either headed for or in a divorce…add to that a house that’s underwater (more is owed on the mortgage than it would sell for)….  and to make matters even worse, neither party wants the house.  Talk about a bad situation…but there is a solution or two.

The first thing to consider would be a short sale.  This is where you sell the house and the bank agrees to accept an amount less than what it owed.  Normally you would need to be able to prove a qualifying hardship such as job loss, large medical expenses, or divorce.  You need to use a knowledgeable real estate agent for this since it often requires extensive negotiation with the lender(s).  It can be especially complicated if you have a second or third mortgage or a HELOC (home equity line of credit).  Unfortunately a short sale can sometimes be a long, drawn out process but it does avoid the foreclosure process and is somewhat less damaging to your credit.  Look for a real estate agent with an SFR (Short Sale and Foreclosure Resource) certification from the National Association of Realtors or a CDPE (Certified Distressed Property Expert) certification.  Personally I’m partial to the SFR (since I have one) but I’m sure both are good.

If you’ve tried to sell your home unsuccessfully for a few months (especially if you’ve had no offers at all) you could ask your lender about doing a “deed-in-lieu“, which simply means you give them the house rather than going through the foreclosure process.  They might even make an offer called “cash for keys” where they give you cash in exchange for your keys (and house).  It usually isn’t a lot, maybe a thousand or so but it does avoid the foreclosure process and you walk with a little cash.

If none of the above works, your only remaining solution could be foreclosure.  While I’m not an advocate of that, sometimes it simply can’t be avoided in some situations.  Divorce, underwater, and nobody wants the house could be one of those situations unfortunately, especially if neither party is able or willing to make the payments.

As always, don’t assume that what I’m telling you is a substitute for legal advice.  It’s important that you seek the advice of an attorney experienced with distressed property.

Just keep in mind that as bad as the situation is, time will pass and things will get better.  When they do, get in touch and we’ll find you a place to start your new beginnings.  Best of luck in all you do!

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About Bob Gilbert, GRI

Realtor with Edina Realty, Prior Lake, MN
This entry was posted in Distressed Property, Selling Your Home and tagged , , , . Bookmark the permalink.

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