This is an extremely complicated question these days. Most people, even wealthy people, are “upsidedown” on their mortgage–meaning that because the housing market crashed, they owe more on their house than what it’s worth. However, during a divorce it’s not infrequent for one of the parties to want to keep the house for a variety of reasons: sentimental value, to keep the children in the house they grew up in and keep them from changing school zones, and perhaps the mortgage is cheaper than it would be to rent an apartment of a comporable size. The problem is that the spouse that’s leaving the house doesn’t want his/her name left on the mortgage (specifically, the note) because he/she is still financially liable if the party who remains in the house stops making the payments and he/she would also have a difficult time obtaining other loans while still being listed on the mortgage. Many people think it’s as simple as one party signing over a Quit Claim Deed to the other party to get someones name off the mortgage, but the deed just affects the ownership. No one ever wants to relinquish ownership in property while they’re still financially responsible.
There are really only two ways to get someone’s name off the mortgage and the note: to sell the house, or for the party remaining in the house to refinance it into his/her own name, thus removing the opposing party’s name. Refinancing is difficult, however, and essentially impossible unless there is a significant amount of equity in the house.
People can also work with lenders and seek loan modification programs, but from my experience, those haven’t been too successful. And, of course, it’s important to do the best you can to keep your credit as good as possible, which is very difficult in times like these.
Unfortunately, many people have to sell the house because they owe more on the mortgage than what the house is worth. In this scenario, the best option is a short sale. If foreclosure is imminent, many people stop making the mortgage payment because they feel as though they’re wasting money if the house is going to be foreclosed on. I recommend people in these situations to talk to a real estate attorney.
There are times that even after a foreclosure and short sale the lender may sue the lien holders. If this were to be the case (and I should mention this is quite rare), it would be in civil court but the family law judge would more than likely order that each party be equally responsible for any deficit.
Before you hire a Tampa divorce attorney, make sure he/she has experience in handling real estate issues and can advise you the best way to separate all liabilities with your ex-spouse while preserving your credit as much as possible.