Legal Question in Real Estate Law in California
Short Sell VS Loan Modification
My husband and I have owned our house for 28 years. I just filed for divorce and moved out of the house. The court ordered our house to be put on the market in Dec, in Feb and again in May. My husband is drragging his feet. The house will have to be a short sell, listed at about $150,000+ less the we owe on the mortgage. I have no plans on buying another home. My credit has already been ruined by my husband. My husband wants to do a loan modifidation. He says he cannot pay temporary support and the mortgage and claims his income is $0. He is self employed, owns a business (corporation) and owns a building as an LLC...He used all my retirement money. He is not good at handling finances. He is always late and puts everything on credit.
I do not work. What would be better for me? Get taken off the mortgage and let him do the modification, stay on the mortgage and do the modification, short sell? If I am taken off the mortgage does that mean I am not responsible for the loan? Do I still own the home if I am on the title? If the economy goes up and we sell the home in 2 years will I be entitled to half the profit (if any)? I had depended on the equity in the house to help me with my retirement. I am 60. What is in my best interest?
1 Answer from Attorneys
Re: Short Sell VS Loan Modification
This really isn't a real estate question per se. You need to consult with a family law attorney primarily before you address the issues of real estate, as it sounds as if your interests are not being protected well in the divorce.
To briefly address the real estate questions, a short sale may result in you and your husband being liable for that $150,000 short personally. Just because the lender agrees to release the collateral (the home) for less than is owed, they generally do not forgive the balance owed - remember, you signed a promissory note for the whole amount. Loan modifications may not result in that personal liability, but the re-default rate on mortgage modifications is extremely high, so its not much of a solution either. Depending upon the mortgage or mortgages on the property, you may be both better served to let it go into foreclosure and walking away. Before you do so, however, you need to consult with a real estate attorney to determine if you might have deficiency liability post-foreclosure.
Finally, as to equity in the home, if you are $150,000 under water on the home, I don't think two years is going to get you very far towards rebuilding equity. Additionally, you need to determine what the Family Law Court has done with the title to the home - without reviewing that information, nobody can tell you if you retain rights to title and equity or not.
*Due to the limitations of the LawGuru Forums, The Gibbs Law Firm, APC's (the "Firm") participation in responding to questions posted herein does not constitute legal advice, nor legal representation of the person or entity posting a question. No Attorney/Client relationship is or shall be construed to be created hereby. The information provided is general and requires that the poster obtain specific legal advice from an attorney. The poster shall not rely upon the information provided herein as legal advice nor as the basis for making any decisions of legal consequence.
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