Posted on: 19th Mar, 2007 07:51 am
hello,
i had asked a question on a different board and thought i would ask again.
my husband was married and in the divorce she was given the martial house 1st mortgage and he was given the 2nd mortgage on the house. he quit claim deeded the 1st mortgage to her. now almost 8 years later, we are still paying the 2nd, but her house is 2 months late on payments and she is considering foreclosure. she has bought another house a few months ago with her current husband and has had her old house on the market for almost a year. now she can not afford both payments.
we are considering taking over the 1st mortgage and having her quit claim the deed back to my husband. but we have a house and we would have rent/sell it to afford this other house.
we are afraid if we do not take on her 1st mortgage we could possibly get stuck with the 2nd mortgage forever, if she forecloses on the 1st. my atty said 50/50 chance the foreclosure could include the 1st and 2nd or since he was court ordered to pay the 2nd in the divorce, he may be stuck with the 2nd and no house to ever refinance to get out of it...
what do you all think on this???
thank you
crissi
i had asked a question on a different board and thought i would ask again.
my husband was married and in the divorce she was given the martial house 1st mortgage and he was given the 2nd mortgage on the house. he quit claim deeded the 1st mortgage to her. now almost 8 years later, we are still paying the 2nd, but her house is 2 months late on payments and she is considering foreclosure. she has bought another house a few months ago with her current husband and has had her old house on the market for almost a year. now she can not afford both payments.
we are considering taking over the 1st mortgage and having her quit claim the deed back to my husband. but we have a house and we would have rent/sell it to afford this other house.
we are afraid if we do not take on her 1st mortgage we could possibly get stuck with the 2nd mortgage forever, if she forecloses on the 1st. my atty said 50/50 chance the foreclosure could include the 1st and 2nd or since he was court ordered to pay the 2nd in the divorce, he may be stuck with the 2nd and no house to ever refinance to get out of it...
what do you all think on this???
thank you
crissi
Crissi, in my opinion your husband should take over the 1st and try to refinance both mortgages into a single one. And if the market is good then sell it off.
Hi Crissi,
"Now almost 8 years later, we are still paying the 2nd, but her house is 2 months late on payments and she is considering foreclosure."
Foreclosure of first mortgage wipes out subsequent liens like the second mortgage as it exists for you. I would let the house go into foreclosure.
"Now almost 8 years later, we are still paying the 2nd, but her house is 2 months late on payments and she is considering foreclosure."
Foreclosure of first mortgage wipes out subsequent liens like the second mortgage as it exists for you. I would let the house go into foreclosure.
first of all crissi, one cannot quit claim a mortgage, but can only transfer property through the deed. i guess your husband has given away the home to his ex-wife through the deed and now wants to get it back so that he can save it from foreclosure. please correct me if i am wrong.
if there is a foreclosure on the first mortgage, you will not be able to get the property. and, yes your attorney is correct. there is a 50-50 chance that the foreclosure may include both the loans. so, it is always better that you take over the first loan. but then there is another thing that should be noted here - the court has ordered the ex-wife to pay down the first loan and your husband to repay the second.
i am not sure as i am not a legal professional, but get it verified with your attorney as to if you need a court approval to take over the first loan. also, you need to consult the lender if he will be transferring the loan over to you through a novation.
if you need to rent/sell your current home to afford the payments on the other home, well, i would suggest you to go for the rent.
since the second loan is subordinate to the first, so i think you should take a cash-out refinance when you get the home through quit claim. using the cash-out loan, you can pay off the first loan, use the remainder to pay off the second to a certain extent. the remaining part of the second loan can be paid off from the rent payments.
feel free to ask further.
if there is a foreclosure on the first mortgage, you will not be able to get the property. and, yes your attorney is correct. there is a 50-50 chance that the foreclosure may include both the loans. so, it is always better that you take over the first loan. but then there is another thing that should be noted here - the court has ordered the ex-wife to pay down the first loan and your husband to repay the second.
i am not sure as i am not a legal professional, but get it verified with your attorney as to if you need a court approval to take over the first loan. also, you need to consult the lender if he will be transferring the loan over to you through a novation.
if you need to rent/sell your current home to afford the payments on the other home, well, i would suggest you to go for the rent.
since the second loan is subordinate to the first, so i think you should take a cash-out refinance when you get the home through quit claim. using the cash-out loan, you can pay off the first loan, use the remainder to pay off the second to a certain extent. the remaining part of the second loan can be paid off from the rent payments.
feel free to ask further.
Hello, I appreciate the responses.
What is a Novation?
Also, I called the Lender on the 1st and they said once the quit claim deed is performed and accepted, we would have to pay 12 mths and then they would allow a refinance. But not until 12 months. Otherwise they said I would have to come up with a down payment and get a new loan and pay off the existing loans. The loans are through two different companies. We do not have the funds available for a down payment. So I guess we are going to go ahead and Quit Claim the Deed into our names and rent our house. Then in about 1 year or less if the market gets better. We can put the house on the market and hope it sells this time. We will clean it up and make it look nicer in the mean time. Goal is to get a bigger and better house then our current home or the home we are going to take ownership of here soon. My husband thinks this is the better way. We will at least know for sure that we will not be stuck with a 50,000 second loan and no 1st, if the foreclosure was to have happened. We spoke with our Atty and he will be writing up an agreement for the Quit Claim and also another contract stating that we are taking this loan over due to her deliquentcy and to avoid a foreclosure. I will make sure he does check into whether we need court approval. Since she was given the house in divorce. But I would hope since we are doing this through the Atty, it should be as correct as possible.
Thanks for all the comments.
What is a Novation?
Also, I called the Lender on the 1st and they said once the quit claim deed is performed and accepted, we would have to pay 12 mths and then they would allow a refinance. But not until 12 months. Otherwise they said I would have to come up with a down payment and get a new loan and pay off the existing loans. The loans are through two different companies. We do not have the funds available for a down payment. So I guess we are going to go ahead and Quit Claim the Deed into our names and rent our house. Then in about 1 year or less if the market gets better. We can put the house on the market and hope it sells this time. We will clean it up and make it look nicer in the mean time. Goal is to get a bigger and better house then our current home or the home we are going to take ownership of here soon. My husband thinks this is the better way. We will at least know for sure that we will not be stuck with a 50,000 second loan and no 1st, if the foreclosure was to have happened. We spoke with our Atty and he will be writing up an agreement for the Quit Claim and also another contract stating that we are taking this loan over due to her deliquentcy and to avoid a foreclosure. I will make sure he does check into whether we need court approval. Since she was given the house in divorce. But I would hope since we are doing this through the Atty, it should be as correct as possible.
Thanks for all the comments.
Hi Crissi,
Welcome to the forums.
Yes, it is always better to consult an attorney who can help you out with the legal aspects of a process.
Novation is a legal way of transferring the loan from one person to another.
I have gone through your entire story and I feel that the first lender has suggested a good option. You can go ahead with the quit claim deed ad then refinance as soon as the market gets better.
It's good that your attorney will be drafting a quit claim deed and another contract stating why you have taken over the first loan. I think you are going the right way.
Best of luck
Sara
Welcome to the forums.
Yes, it is always better to consult an attorney who can help you out with the legal aspects of a process.
Novation is a legal way of transferring the loan from one person to another.
I have gone through your entire story and I feel that the first lender has suggested a good option. You can go ahead with the quit claim deed ad then refinance as soon as the market gets better.
It's good that your attorney will be drafting a quit claim deed and another contract stating why you have taken over the first loan. I think you are going the right way.
Best of luck
Sara