Legal Question in Real Estate Law in Illinois

I try to get rid of my name from home equity loan account.

Since EX was using this loan, He agreed to pay the whole thing when we divorced. He initiated/ claimed at first our divorce. But according to loan company , unless EX husband refinance it, they will not be able to get rid of my name from the loan. But EX probably will not have ability to do so because of his bad credit by foreclosure. So I decided to prepare a letter by myself with permission from EX ,so that to make sure I will be free from this loan. Our MARITAL residence was foreclosed but sold. And still have liability for 2nd mortgage.

Because I have my own property ( new home), I want to protect my self from this loan liability.

I prpared the letter by myself as below. Should I have this letter reviewed by a lawyer before showing to EX。

Ex told me that he will ask his lawyer to review my letter. I am concerened about he wll not take a responsible for paying off or refinance the loan in the future by his lawyer.

After both sign it, my letter will be enough to prevent me from liability claim ?

XXXX, 2013

I formally declare that I, EX　husband name, will be solely responsible for paying the entire amount of home equity loan taken against the former residence (address :xxxxxx). I,EX　husband name.will pay off or refinance the loan as soon as possible so that your name(My name) will be no longer on the account.

Home equity loan balance $xxxx as of xxxx, 2013. (Please see attached copy)

Home equity loan company:xxxxx

Account number :xxxx

Former marital residence address: xxxx

I , EX　husband name want to state that You, My name, have no liability for this home equity loan according to our divorce decree VI　REAL ESTATE � MARITAL RESIDENCE　6.1～6.6 (please see attached copy)

ARTICLE VI

REAL ESTATE � MARITAL RESIDENCE

6.1 Description, Ownership. The Parties own as tenants by the entirety

improved real estate commonly known as 1314 Northgate Drive, Bartlett, Illinois.

MY NAME shall make a good faith effort to procure a new residence and shall continue

to reside in the marital residence during this time period. MY NAME shall vacate the marital

residence within twelve (18) months of the date of entry of the Judgement of Dissolution but in no event, later than December 31,2011.

6.2 Waiver of Interest. At the time of ther refinace of the property as set forth in section 6.6 below, MY NAME shall waive, remise and release any and all interest, including the homestead exemption which she may have in and to said property and shall execute any and all documents, specifically a Quit Claim Deed, as shall be necessary to assure EX HUDSBAND�S sole and exclusive possession and ownership of said property.

6.3 Property Tax Deduction. Effective upon the date of entry of the Judgment of Dissolution, EX HUDSBAND shall be solely entitled to take the property/mortgage interest tax deduction associated with said property.

6.4 Future Obligation. Commencing upon the date of entry of the

Judgment of Dissolution as set forth herein, EX HUDSBAND shall pay and defray and be

solely responsible for the mortgage payments, real estate taxes, insurance premiums, and

for any and all other costs and expenses relating to ownership and maintenance of the property, and shall indemnify MY NAME and hold him harmless therefrom.

6.5 Future Sale. EX HUDSBAND shall split equally(50/50) the equity from ths sale of the marital residence, assuing there is equity in the home at the time of the sale, with MY NAME. At the present time, there is no equity in the marital residence.

6.6 Refinance. EX HUDSBAND agrees the refinace the mortgage recorded against said real estate within 18 months of entry of a Judgment of Dissolution herein in order to release MY NAME from any and all liens currently existing against said propery, and pay off the principle balance and interest on any notes associated with the above-mentioned mortgages, EX HUDSBAND shall hold MY NAME harmless for any costs associated with the refinace and/or costs related to the existing mortgage on the former marital residence.

This letter must be signed and notarized by both parties to ensure that we both agree to the arrangement.

Sign

Ex hudsband

My name


Asked on 8/21/13, 2:32 pm

1 Answer from Attorneys
Henry Repay Law Offices of Henry Repay

This is a question that falls more under the category of family law. In any event, I do not see that the letter is giving you more than you already have through the divorce.

The terms of the divorce allocate rights and responsibilities between you and your ex. The terms of the divorce cannot change the rights of third parties such as creditors. If he is obligated to pay pursuant to the divorce, but the creditor comes after you because he fails, then your recourse is to take him back to family court to address the concern.

Similarly, even if your letter formed a proper contract between you and your ex, it would bind him to you, but would not bind the creditor. Neither you, nor a court, can typically take rights away from a third party. When the creditor made the loan, they did so based on the two of you becoming obligated to the loan. In assessing the risk of making this loan, they considered that they could enforce it against either or both of you. If you or a court could somehow take that away, then lenders would always have to evaluate loans based on the borrower with the worst credit, just in case that is who they would get stuck with. There would be far fewer loans or borrowers would not be able to borrow as much.

If two married friends came to you to borrow $20,000.00 and both signed a note, you would not want them or a court to be able to take one off the hook, leaving you with only the other, perhaps the less responsible one, would you?

You could go back into court and try to enforce the 18-month provision, but there is a practical side as well as a legal side. If the home has been foreclosed and your ex does not have a source from which to pay this or a way to refinance it, what can a court really do. He is not "willfully" violating the order. He is victim of the economy and perhaps his own mismanagement, but probably would not be held in contempt of court at this time. Your best hope is that he continues to pay.

Especially if you have any other financial concerns, then you may want to consider bankruptcy. You may be able to do so regardless that you now own another home. Filing now, before you build much equity, may be in your interest, as difficult as that may be to accept. If your financial situation does not warrant filing bankruptcy, then you may just want to wait it out and hope he does not bankrupt the debt, leaving you with it and a non-dischargeable claim against him in family court.

Not to add to your worries, but are you certain that you are no longer on the hook for any deficiency after the foreclosure of the first mortgage? Have you reviewed your credit? You should be able to do so free at www.annualcreditreport.com, provided you have not done so with all the reporting agencies in the last year. If you have done so with one credit reporting agency, review the report. Then, you may also want to try one of the other agencies.

There are many more considerations that you will only be able to address in a face to face appointment with your divorce attorney, another family law attorney or perhaps in a bankruptcy consultation. I recommend you take a close look to determine your best course as it may be far better to address it now, rather than later when it may be even more bothersome.

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Answered on 8/21/13, 3:11 pm


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