Losing A Home To Foreclosure And Domestic Relations Issues

By Author: Nick Adama
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When there are other legal issues in addition to a foreclosure, the housing situation becomes even more complicated. Especially in situations of divorce, separation, or even domestic abuse, there is a greater tendency for families to be broken apart and the basic issue of survival of either party to be questioned. And even worse, cases of divorce and domestic violence have been found to increase during times of high foreclosure rates and economic recession.

In these cases, there may be both a foreclosure lawsuit and a domestic relations lawsuit going on at the same time. The domestic relations case involves an abuser and a survivor, while the home defense case involves both of the former parties against the mortgage company. And neither case may help resolve the other, unless there is a more united front in the home defense case. In fact, a domestic relations case may limit the options the homeowners have for saving the property.

Especially if the abuser has stopped paying the mortgage, the legal counsel for the survivor may have to go to court to obtain an order that continuing payments are made. However, if a ...
... period of time has passed between the last payment and the court order, the servicing company may require far greater than just the regular monthly payment to be sent in. And lenders and servicing companies are not bound by the terms of a domestic relations order.

Some attorneys will attempt to bring the mortgage company into the domestic relations case, but this is not always successful. The times where it can be worth trying is if a stay of foreclosure or acceleration of the mortgage is needed for only a short period of time. In these instances, the domestic relations court may grant an injunction against the mortgage company based on the terms of the order. But it may be important to prove that payments will be made on time soon (within a period of a few months, at most).

Injunctive relief against a mortgage company may also be sought if the servicer refuses to accept payments from a survivor whose name is on the mortgage and the note. If a party's name is on the note, the lender is unable to refuse payment, despite a domestic relations court proceeding. In fact, the refusal to accept payments from a party listed on the note may bar future foreclosure proceedings or extend a redemption period guaranteed by law, as well as being a breach of certain duties lenders have towards homeowners.

In cases where a survivor's name is on the mortgage, but not on the note, the situation is slightly more complicated. In these cases, it may be best to have ownership rights and obligations of the note transferred to the survivor through an order in the domestic relations court. However, there is a danger that the party listed on the note to begin with may agree to a loan modification or other agreement that makes the loan unaffordable for the other party. Owners who are on the mortgage but not the note, however, may be able to file a Chapter 13 bankruptcy and cure the default, if the situation is appropriate.

Thankfully, the issue of mortgage acceleration just due to the transfer of the ownership rights in a domestic relations case is not something to worry about. Contract law and federal law usually prohibit the lender from accelerating a loan when there is a transfer of interest from an abuser to a survivor. The Garn-St. Germain Depository Act of 1982 prohibits acceleration when ownership is transferred between spouses, and the Equal Credit Opportunity Act prohibits discrimination on the basis of marital status.

Selling a property that is involved in a domestic relations case may be an option, but it generally requires court approval to get the legal authority to move ahead with this option. All ownership rights might need to be transferred to the seller, or a power of attorney granting rights to negotiate a sale may be necessary. Any remaining equity or debt, if there is a short sale, will need to be apportioned between the parties.

In all cases where the ownership of a home may be transferred or is in dispute due to a domestic relations lawsuit, it may be best to file a lis pendens on the property. This can prevent against equity stripping, further encumbering of the property, or transfer of the property. There may also be a court order which forbids withdrawing any additional funds from a home equity line of credit (HELOC) or obtaining any additional mortgages on the home.

Finally, if there are few other options than letting the house go into foreclosure, survivors of domestic relations disputes may be able to obtain a cash for keys offer from the lender. Tenants or former owners are offered these deals as a way for the lender to entice people remaining in the property not to cause any damage and to move out amicably. They often offer several thousand dollars in exchange for a clean house and the keys. Servicing companies should have few objections to paying a domestic violence survivor to move out of a property to avoid eviction after foreclosure.

There are a whole range of issues affecting a property in foreclosure, and many of these issues can be exacerbated or added onto if there is also a domestic relations dispute. Homeowners should have adequate legal counsel for both the foreclosure help and the domestic relations case in order to sort out as many of the details as possible. Foreclosure is complicated and stressful enough without piling on additional messy disputes and lawsuits.
Nick writes for the ForeclosureFish website, which gives homeowners the information and resources they need to avoid foreclosure on their own and fight back against the bank's lawsuit. The site describes various solutions to save a home, including foreclosure refinancing, deed in lieu, loss mitigation, stopping a trustee sale, bankruptcy, and more. Visit the site on the web to read more about how you can avoid foreclosure and eviction, repair your credit, and establish a long term financial plan once a temporary financial setback is over: http://www.foreclosurefish.net/