Legal Question in Real Estate Law in California

As far as odds of obtaining a loan go, that is not a legal question and should be directed to a loan broker or direct-lender. As far as the other issue - does the divorce decree absolve you of liability for his default, the unfortunate answer is no. A divorce decree is between you and your former spouse. Unless the lender was actually made a party to the divorce through a QDRO or some other means (which almost never happens), the Court order is not binding on the lender, and they may possibly pursue collections from you, may report the short-sale on your credit report, and more importantly, you may have an income tax implication as a result of the short-sale. You will need to review this with your own CPA because there are a hundred permutations to the rules surrounding capital gains and forgiveness of debt in short-sales, and only someone who is a tax practitioner and has specific knowledge of your personal financial situation can address that issue. I cannot provide you tax advise, but will tell you that it is more likely-than-not that you have a tax problem with his short-sale of the home. You may have the right to seek indemnity from him for the taxes under the divorce decree, but again, as with the mortgage lender, the divorce decree is not binding on the IRS or FTB. Sorry for the bad news. I do, however, suggest that you pull your credit report, and dispute the reporting of a short-sale anyway (if it is there) based on the divorce decree. Just because legally it did not absolve you of the consequences doesn't mean you shouldn't still try to get rid of it. Also, go talk to a loan broker or direct-lender to find out of they can get you qualfiied. An FHA loan has much lower credit requirements.

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Mr. Gibbs answer is completely correct. As between you and the lender and the credit agencies, your divorce never happened. I write to add that although I have not researched this recently, I believe the short sale will disqualify you for FHA loans for three years. Many banks follow that rule for non-FHA loans as well. You should definitely talk to a mortgage broker immediately, and if they concur that this will be a significant credit and loan qualification problem, you should talk to a family law attorney about options for preventing the short sale.