Keywords: Foreclosure Divorce, filing for separation, legal separation
A couple that goes through a foreclosure while going through a divorce need to be aware of many problems that can arise due to two simultaneous processes. These are some of the top questions to consider during a Foreclosure Divorce.
Who will have to bear responsibility for the Mortgage Debt?
After filing for separation, a couple divorcing and in a state of foreclosure have to first find out whether a single spouse or both spouses are responsible for the debt. Did one spouse or both spouses sign the documents for mortgage loan, or did both of them sign? In case the document was signed by only one spouse, he or she needs to be responsible for the loan repayment. This indicates that in case of a foreclosure, the spouse signing the document will see his credit rating drop. However, there will be no impact on the credit score of the other spouse after legal separation, or even after a divorce.
Which spouse will assume the mortgage?
In case a spouse wishes to retain the home following a divorce, he / she may assume the whole mortgage loan even when both spouses have co-signed the mortgage papers or the other spouse happens to be the only mortgage signer. This holds true as long as the mortgage paper does not have any clause that particularly forbids such an assumption.
What should be done in case of a Due-On-Sale Clause?
Most mortgages have a clause called “due-on-sale” which states that in case the property is conveyed or sold, the whole loan balance would turn into a due. The Due-On-Sale Clause is typically the only tool that is used by lenders to prevent borrowers from the transfer of the property or the mortgage. In case the mortgage paper does not have any due-on-sale clause, one spouse may transfer the mortgage and property title by law without the consent of the lender. Get free agreements for Texas legal separation or legal separation in NC here at forms.legal website.