Divorce and foreclosure often go hand in hand. Many individuals find themselves divorced and stuck with a home that they cannot afford the mortgage on. Others are in divorce and then the individual responsible for the mortgage simply quits paying it. This can be very devastating to both individuals if the home still has both individuals on the deed. There are several options that can be used to relieve both individuals from the burden of an expensive mortgage that neither can afford.



The house can be sold and both individuals can share the profits if there are any. They will be able to avoid foreclosure by paying off the mortgage. If the house is foreclosed on the bank will force you out and sell the home. In many circumstances, the house value is not high enough to pay off the lender and through the foreclosure process the bank may be able to come after the assets of both individuals to pay the rest of the debt.

Throughout the process of deciding what to do with the home it is important to remember that you do not want to remain on the title of the home if you can avoid it. Many couples will decide to keep the home running and may work together to pay the mortgage despite the fact that they are divorced and one spouse no longer lives in the home.

If there are any disputes between the two ex-spouses, one person may simply decide to stop paying their portion of the mortgage and the other individual is stuck with the entire bill. This is often how divorced couples find themselves in a horrible foreclosure situation. If you remain on the title and you are not living in the home, you will find that the foreclosure of your ex-spouse will be attached to you as well. Any liens or judgments that the home owning spouse receives will then attach to you because your name is on the title. If your ex-spouse obtains a lien against them, the lien will also ruin your new title as well.

To avoid a situation such as this, it is important that after the divorce the mortgage must be refinanced. The spouse that chooses to move out of the home should have their name removed from the mortgage. The easiest method of doing this is through refinancing the mortgage. Some mortgage companies will simple remove the spouse but will have to complete an application called an Assumption Agreement.

The spouse that remains in the home will agree to assume any and all responsibility for the mortgage debt. The lender will require tax returns and a current appraisal of the home. They will also require that the loan to value is very high. If there is enough equity in the home then the bank may consider a request to release the spouse from the mortgage. If there is not sufficient equity in the home then bank may not consent to removing the spouse from the mortgage.