When the house mortgage is underwater and you’re divorcing

One of the major marital assets is the home. Typically, when a couple goes through a divorce and they own equity in a home with a mortgage, one of two scenarios occurs. The first scenario is that one person is awarded the home in exchange for other financial stipulations or considerations in the divorce agreement. If so, the mortgage is usually refinanced into that person’s name individually. On the other hand, the house is sold, and the proceeds from the sale are divided among the couple. Unfortunately these scenarios become a little more complicated when the mortgage is underwater. In that event, the home is a liability rather than an asset, and the couple is faced with how to deal with overcoming the debt. There are several options available in this situation, including, but not limited to, refinancing (with programs designed to help underwater homeowners, such as Home Affordable Refinance Program – HARP), short sale, foreclosure, or deed in lieu of foreclosure. As a final option, you could also stay together in the home, despite the divorce, until the mortgage payments are under control. If you are going through a divorce and are currently struggling with an underwater mortgage, be sure to speak with an experienced attorney to determine which option is the best for your individual situation. Ultimately, underwater mortgages only cause the divorce process to become more difficult.

For additional information about Pennsylvania family law or the divorce process, or to discuss your particular situation and learn about your options, please schedule a confidential consultation with attorney Joanne Kleiner by calling us at 215-886-1266. Or, fill out our intake form and we will contact you. The decisions you make today really will affect your future. Let us help you make those decisions intelligent and informed.

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Montgomery County Bar Association
Pennsylvania Bar Association
International Academy of Collaborative Professionals