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November 8, 2019 50 min

Today, we are going to talk about how divorces can impact both purchasing, selling, real estate and also financing real estate. So today, I'm pleased to have a colleague of mine, Mr. Marc Edelstein is here with us. How are you doing Marc?

Good, good-

Good. So Marc has been a lender for 17 years. He is a certified divorce lending professional. I think I got that right.


And a lot of folks might not know that that's even a designation, it absolutely is. It's not something that a person gets overnight, it takes some effort, it takes some dedication. And I think in our business we kind of learn the hard way when we're early on, that a divorce in a transaction isn't just an extra document, it can absolutely affect the flow of the transaction and, whether it's even doable or not.

Thanks for coming on board, Marc.

Absolutely, thanks for having me.

Yeah, yeah, yeah. We went over some Q&A prior to about some of the things that impact things, but Marc if we could, why don't we just kind of let you paint a 10,000 foot view picture of the kind of things that folks need to at least be thinking about when there's a divorce in their life, and there's going to be a sale of real estate, purchase of real estate, et cetera.

Sure, sure, sure. When it comes to divorce in real estate, and divorce in mortgage lending, there are lots of mortgage lending guidelines that intersect with the family law. So a lot of times, we see a spouse that needs to re-enter the workforce after an absence being out of the workforce, or somebody who is going to be receiving some sort of support, whether it's alimony or child support, as their form of income on the other side of the divorce. And how can we use that income towards qualifying? So that's a big thing that we see a lot. The other thing is your mortgage debts tend to be joint with husband and wife. And so when one spouse is awarded the home for the divorce, and the other spouse is either getting an equity buyout, or just off of the home, if there's no equity to split, that mortgage becomes what we call contingent liability.

And so how does the payment history after the judgment on that mortgage, that our borrower is not responsible for any longer, impact their ability to be able to purchase a home? As far as other guidelines and other things to consider, it's really the timing of filing of your divorce. If you file your divorce, and then you go to apply for mortgage to purchase a new primary residence, and your divorce is not final, it makes things very, very, very complicated. Most lenders will not grant you a mortgage approval without either a legal separation agreement, or property settlement agreement signed by a judge or your final divorce decree.

Yeah, yeah. And, Jon, you probably had conversations. I mean, think about the natural progression of things. There's the unfortunate things that lead to a divorce, the divorce is filed, and then one or both parties are thinking, I need to move on. So I'm going to start house hunting. But they're in that window where the divorce is filed, but it's not finalized.

Right. So you know Tony, on the loan application, we have a declaration section where we ask nine, 10, 11 questions about your citizenship, do you intend to occupy this home? Are you going to borrow any part of the down payment?

Marc Edelstein
(248) 379-6749

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