A number of the matrimonial sales we have closed have had the “co morbidity” of financial distress where the mortgage was behind. Financial stress is a huge factor in marital problems, so this is no coincidence. This double whammy is especially impacted in places like New York, where the courts are the process by which lenders pursue foreclosure. So, in addition to people going through the difficulty of their marriage dissolving, they are also dealing with inch-thick packets of legal papers and collection efforts.
The good, the bad and the ugly about all of this.
The one “good” thing is that in Westchester County especially, the court is backed up and it can take more than a year for the foreclosure to meander though. The homeowners do have time compared to other areas of the country. New York also has more programs to aid struggling homeowners than other states, such as mandatory settlement conferences where a court appointed referee meets with the borrowers and the lawyers for the lender to ensure that the homeowners are being treated fairly. For example, if they are applying for a loan modification or forbearance, the lender’s representatives (lawyers) have to account for progress in that area. Before this was a law, people would be stuck in red tape hell and often give up. It felt rigged.
But solutions are only as good as the resources devoted to using them, and if a couple is not on speaking terms or can’t plan anything civilly together, this available aid can go unused.
The bad and the ugly are fairly obvious: damage to credit, stress and uncertainty, and often blame because the divorcing couple is not on the same page and questions any and all decisions that got them there. I’d love to say that this is unproductive, but easier said than done. But the fact remains that one or both homeowners should get proactive about addressing the delinquent mortgage for their own stress management and to ensure they have more bandwidth to settle their difference amicably as possible for their long term well being.
Options include a loan modification or forbearance if one of them wishes to remain in the home, and of course selling if they both want to move or one cannot buy the other out. In those cases you still should communicate with the lender to buy as much time as you can to avoid more litigation, fees, and ultimately, foreclosure. I’ve written quite a bit about this here and elsewhere.
Going through a divorce is tough enough to add mortgage problems, especially if they can be mitigated to buy time and reduce anxiety. That way, if one wants to buy the other out or a modification is possible, it can be pursued. And if selling is the answer, it’s always better to sell without the added pressure and uncertainty of the lender’s collection process.
