Q: During the course of our marriage, my ex-husband and I purchased a home and later took out a second mortgage on the house. In the divorce agreement, I was awarded the house and have subsequently been making the regular monthly payments on the primary mortgage.
As the second mortgage was used to pay off items that were mostly in his name, he agreed to pay the second mortgage upon separation. You should know that neither the second mortgage account nor responsible party was specifically named in the divorce agreement.
For almost four years, he has been making the monthly payments. However, a few months ago, he decided to stop making payments and defaulted on the loan.
I have been informed by reliable sources that I do not have adequate legal recourse to force him into continuing to paying this loan. Yet, I do not feel that after all this time I should be forced into a position of making these payments (nor do I feel that I can afford them as a single mother).
After speaking with some co-workers, I was informed that should he or I neglect to pay this loan, the company would place a lien against the house that would have to be paid at the time of sale. Is there any other recourse that I have in this situation? Due to this other issues with my ex-husband, my credit is already very poor, thus the damage of default could not possibly make it any worse.
Also, I intend to sell the house in the next two years. By that time, there should be enough value in the home to cover both the primary and secondary mortgages. How hard is it to settle a lien on a home? What happens if I go to sell the house and the company has not yet placed a lien on the home? Can I still sell the house without paying off the loan? Can I still be sued for the amount of the loan at a later time?
Thanks for your advice.
A: I don’t know where you live, but your co-workers are misinformed about at least one thing: The second lender could force you into foreclosure if it wanted. More likely, the second lender already has a lien against your home. When you took out the second mortgage, that second mortgage is a lien on the home. When this house sells, you will not get any proceeds until both of your lenders have been paid off.
You and your divorce lawyer appear to have made a serious mistake by not having the loans specifically named in your divorce agreement. But beyond that, if you are a co-signer of the second mortgage, you are responsible for that loan even if the proceeds were used by your husband to settle his own debts.
Had you named the loan and responsible party in your divorce agreement, you might still be in the same place, but you might have additional legal standing to go back to court to force the issue.
Is your ex-husband still listed on the property as an owner? Is he listed on both mortgages as an owner? If so, then he has killed your credit as he has killed his own — probably a small comfort. Hopefully, your ex-husband has given up any legal interest he had in the house.
If you feel you can’t afford to pay the second mortgage bill you have a few choices: You can ask the lender to renegotiate the terms of the payment; you can engage in free budgeting services from a reputable credit counseling agency, like CCCS of Greater Atlanta to figure out how to make your income go farther; or you can get a second job.
For more information on any legal options you might have, as well as what liabilities and responsibilities you have based on the documents you’ve signed, please talk to a qualified real estate attorney.
You can also go back to the divorce attorney who assisted you and determine whether you can reopen the divorce proceeding to add a provision to the divorce decree that would make your former husband responsible for the second mortgage. While reopening the divorce judgment might not prevent the lender from foreclosing on the home, it might buy you some time until you decide to sell the home or to entice the second lender into making the loan payments manageable for you.