Refinancing Your Mortgage in the Midst of Divorce: A Conversation with Sam Mehta

Learn about your mortgage refinancing options during divorce as we help guide you to make informed decisions while in the midst of one of life's more challenging transitions.

In my candid conversation with Sam Mehta of Blue Fire Mortgage Group, we unravel the web of refinancing options for separating couples struggling with high mortgage rates. Sam, with his wealth of expertise, breaks down the steps you need to navigate to ensure that you make sound decisions regarding your primary residence and mortgage loan to help you navigate financial settlements during divorce. 

The discussion hits on numerous options for dealing with your home including how to divide your family home in divorce and under what circumstances it may make sense to agree to continue to co-own your home after divorce.

If you're grappling with the question of how to secure your mortgage future post-divorce, this episode arms you with vital information. By highlighting the significance of a solid 12-month payment history from the party responsible for the mortgage, Sam illustrates how your actions now affect your lending capabilities later.

Tune in to equip yourself with the insights and resources to understand the financial issues of the divorce process so that you can make decisions which put you on the path of financial independence and stability, no matter what personal storms you may face.

Thanks for listening and I hope you'll continue to learn more about how you can peacefully divorce.

As a divorce mediation attorney in California, Scott Levin helps couples figure out the settlement terms and draft enforceable settlement agreements so they can divorce fairly without needing to go to court. Obtain closure peacefully through an amicable divorce. process that protects families and kids.

Visit San Diego Divorce Mediation for more information and to learn more about our mission to help divorcing couples make informed decisions and fair agreements through mediation or book a free virtual consultation.

Scott Levin, attorney, mediator, CDFA®
Chief PeaceKeeper
[e-mail]
858-255-1321
San Diego Divorce Mediation & Family Law
www.SanDiegoFamilyLawyer.net

Episode Transcript

Speaker 1 (00:02):
Hey everyone, this is Scott Levin, chief Peacekeeper.
I'm here with a good friend ofmine, sam Mehta.
How are you, sam?
Good, scott, how are you doingGood?
So Sam is, with Blue FireMortgage Group, a really
long-time professional in themortgage refinance business.
Sam, how long have you been inbusiness?
21 years, oh, and since you're31 now that means you're 10?

(00:25):
.
I tried 44, but sure, yeah,well, actually I got you beat by
a year.
But so the reason I wanted Samto come on and talk to us or
with us for a few minutes isabout, you know, obviously,
given the mortgage rates and themortgage climate that's been in
existence for a little whilenow, clients of mine going
through divorce and divorcemediation in particular, where

(00:47):
they're trying to come up with acollaborative agreement and
they're willing to give and takeand figure out solutions that
allow, for example, one personto stay in the home and keep the
home, but maybe they can't getthe other person off the
mortgage right now because ofthe rates being too high.
So, sam, off the mortgage rightnow because of the rates being

(01:07):
too high.
So, sam, if a couple and afamily are considering like,
look, we have these kids, wewant them to live in this
property with this person, butthe loan element can't be
modified right now.
Walk us through some of thethings that they should be
thinking about in terms of bothparties staying on the loan and
how that might change in thefuture and under what

(01:29):
circumstances.

Speaker 2 (01:31):
Sure.
So that's a frequently askedquestion that we get where
borrowers are separating or arein the process of separating and
they refinance during the ultralow rate environment of COVID.
So they might have a mortgagethat's somewhere between 2% and
3% and mortgage rates are muchhigher now.
So where their goal is is tobasically figure out if they can

(01:55):
keep their mortgage, keep thelow rate and stay the path with
both being on the loan and titleor one party being taken off
the loan.
And technically it can't reallybe done because mortgage loans
are not assumable by nature.
However, with the rightmediation and cohabitation

(02:16):
agreement or merit settlementagreement in place, it's
possible.
That's where we refer to peoplelike you, scott, to help kind
of navigate that, because that'sa frequently asked question.
Now, one of the things we tellborrowers is look, we understand
a lot of times that they don'twant to refinance or they can't
qualify because rates are higherand it's much more expensive.

(02:36):
So a lot of times we tell themto refinance or stay the path
where they're at, get throughtheir settlement and then
revisit it in six months to ayear after the settlement's over
.
That way they have a little bitof breathing room and some time
to figure it out.
It still keeps, even with thesettlement agreement in place
and after everything is said anddone it still keeps the

(03:00):
divorced couple kind of joint atthe hip, financially speaking.
So ultimately it's notsustainable in the long run.
But it might help them tobridge the gap by buying some
time and kicking the can downthe road on it.

Speaker 1 (03:12):
So one of the things that we talk about when, so when
one person is who's not goingto like kind of be um in the
house or part owner of the houseanymore, but they're on the
loan, obviously their credit istied to those payments.
But one of the things that Ioften told, or what I often
mention, is that if they wantedto buy something down the road

(03:33):
themselves, is there not a wayfor this loan to not be
considered for their mortgagecapacity?
So my understanding is that ifthe, if the, if the payer of the
loan makes 12 consecutivemonthly payments from a separate
account, that this person who'sstill on the loan, but if they
go to qualify for a new loan,that that loan won't be

(03:54):
considered against theirmortgage capacity.
Is that?
Is that a hundred percent oftime?
Is that?

Speaker 2 (03:57):
accurate?
Yes, that that is completelycorrect.
So typically, if you do getwhere I think what you're trying
to say is is if a couple gets,goes through the separation
process and then they'reofficially divorced, yep, they
still have the mortgage in theirnames, but one party is
responsible for it, the other isnot.
And it's outlined in themarriage settlement agreement.
Typically a 12 month historyshowing that the spouse that

(04:22):
kept the house has been makingthe payments is usually
sufficient.
Now there is a possibility thatthey might reduce that to six
months in the future, but that'snot really been solidified.
So we tell all borrowers thatjust be prepared to show a 12
month pay history.
So the downside with that wherethe departing spouse who's
leaving, to start it like, who'sleaving the property or signing

(04:45):
off on the property to their,to the, to their, to the spouse,
the ex spouse, that person ishandicapped because they have to
wait 12 months before they canqualify for a mortgage, which
means they have to rent and anddo that whole thing until
they're closer to that 12 monthwatermark where their ex spouse
has made those paymentsconsistently.

Speaker 1 (05:05):
So that's the only like drawback that we see what,
if a couple has been likeseparated since like 2019 and
they've kind of been already, ormaybe that's too long, that
doesn't always happen but like2022.
So it's like almost three years, right, or going on three years
.
You know, party A is living inthe house, they're paying all
the payments, party B has beenout, they're renting or whatever

(05:26):
Is that, and let's say, thisperson, the payer, has been
paying those payments.
Does that mean that 12 monthshas started back then, if
they've been doing it from a 12month, if they've been doing it
from a separate account already,or does it start from, like,
the signing of the settlementagreement or some other period?

Speaker 2 (05:49):
That's a great question.
So it depends Now typically ifthe payments have been made
consistently for 12 months.
So let's say they separated,the payments have been going on
for 12 months and then theydecide to go through mediation
and do all that.
Typically, if it's alreadyoutlined, it usually goes from
the file date.
But if the separation agreementhas the right verbiage in it to
show that the last 12 monthswere accounted for, then usually

(06:12):
there's some flexibility.
It's a little bit of a grayarea but we can work through
that.
So it's really important toaddress that at the beginning of
the mediation session with yourrespective or with the
respective mortgage lender, whomight be able to help navigate
them.
But it could.
I've seen it go both ways, butit really falls back on the
verbiage of the settlementagreement and the actual

(06:32):
circumstances of when the filedate was.
So, there's changes constantly.

Speaker 1 (06:38):
It could be possible that if the verbiage in the
settlement agreement referencedthat the parties had agreed that
that 12 months started sometimein the past, could that
override the fact that those 12months were not from a separate
account?
Or do you need both, like ifthey still were paying the
payments from a joint accountbut they had agreed that the

(06:59):
money funding that joint accountwas really from the person who
was living there?
Could that be?

Speaker 2 (07:06):
I think it can be If it shows that who's accountable.
But they have a shared bankaccount and then if the assets
were split in that account andparty A had enough to cover the
payments and their expenses andthen party B have their separate
, then that's fine.
It just has to be reallydetailed in the settlement
agreement.
But yeah, it can be done thatway.

(07:28):
Typically what we usually seeis one party moves in a
situation like this.
What's a little bit more commonis one party moves out and then
they're just kind of making thepayments and then keeping some
cash in the joint bank accountso the ex spouse can pay.
You know, their bills, jointbills like the utilities and
other expenses, and credit cards, just to kind of buy.

(07:49):
So that's typically what I'mused to seeing.
But the bank account, to myknowledge, hasn't really
surfaced.
But once again, I think if it'sbuttoned up correctly in the
settlement agreement, then yourmortgage lender should be able
to play well with givencircumstances.

Speaker 1 (08:05):
So lots of issues going on with mortgages and
refis and also coming out of a,maybe even coming out of a,
going on with, you know,mortgages and and and refis, and
and also coming out of a, maybeeven coming out of a sale and
like, what should you thinkabout in terms of, you know,
getting your next mortgage?
Is there one piece of advicethat obviously most of the
people watching this and thatare following me are are are
kind of plugged into the divorceprocess or entering it or maybe

(08:29):
in the middle of it.
Are there any?
Is there one overriding kind ofchallenge that you find the
people calling you are in andhow they could avoid those
things?
Is there kind of one piece ofadvice you can leave people with
?

Speaker 2 (08:44):
I think the key thing is is we are huge proponents of
mediation.
Key thing is is we are hugeproponents of mediation.
So as long as there, if it'scordial enough, we always
recommend that they talk to amediator first and, you know,
determine what is doable andwhat isn't.
That's usually the first youknow order, like the first

(09:09):
precedent that we always kind ofpush towards.
Now, that being said, not allmediators are created equal.
So, for example, someunderstand the importance of
getting the real estate piecesettled between the two spouses
and then maybe there's furthernegotiations between retirement
accounts or other financialassets and they're not sure

(09:29):
that's okay.
But as long as the mediator issavvy enough to figure out their
real estate piece, that'susually the biggest financial
entanglement between bothparties.
So we always say start fromthere first, as long as there's
like a house in the mix.
Now, if they don't own a house,I don't think it matters as
much, in the sense that theirfinancial footprint is probably

(09:50):
much simpler.
So where this like webinar orthis discussion really comes in,
where it becomes really pivotal, is when there is real estate
owned.
So that's the biggest, I think,differentiator and that's where
a lot of things get complicatedbecause there are some tax
questions around investing.
You know the tax deductions andwrite-offs and then mediation,

(10:15):
and not all three along with themortgage, and not all three
play fair with each other at allpoints in time.
So, you know, just having theright parties to kind of help
navigate through is really key,especially.

Speaker 1 (10:29):
I agree with you.
I agree with you.
I agree with you and whenpeople want to talk about you
know that, are working with me.
You know issues beyond thehouse, it all.
We always have to get the housefigured out first, but
everything else comes from thehouse, especially if there's
equity or significant equityright, because all the other
things are like you knowtrade-offs and what, but like
who's gonna does one of you onone on the house is?

(10:49):
The other things are like youknow trade-offs and what, but
like who's going to does one ofyou own one on the house?
Is the other?
Is there going to be a sale?
Is there going to beco-ownership?
Like that has to be addressed,and then the other pieces kind
of fall into place.
Sam has helped so many peoplethat I that are, that are so
many of my clients and networkin and out of the divorce world.

(11:11):
I can't tell you I'm not I'mcertainly not the biggest
referrer to Sam, but I mean he'sbatting a thousand percent in
responsiveness, education,willingness to share knowledge,
time, responsiveness.
I mean everything that youwould want in someone in his
position.
When you need answers, he isliterally delivered to anyone

(11:33):
that I've ever referred.
I encourage you to reach out tohim.
Sam, I'm going to put in yourinformation.
Is there like one place thatyou want people?
Do you want people to go online?
How can they easily reach out?

Speaker 2 (11:43):
No, they can check out.
You know they can reach out onour website at
bluefiremortgagecom.
We're on Instagram at Blue FireMortgage.
You can also email me at Sam atBlue Fire Mortgage if you have
any questions.

Speaker 1 (11:59):
And known as the best email newsletter in the game, I
think too, Every Friday there'sthousands of people that look
for that email newsletter.

Speaker 2 (12:10):
All right, sam, I'll talk to you soon.
Thank you very much, scott, forputting this together.
I appreciate all your help.
Thank, you.