Divorce, Foreclosures and Short Sales in Louisville, KY - Mistakes to Avoid
Some divorce decrees or mediation agreements contain orders about the house that are impossible to fulfill. These orders sometimes further escalates the problem causing further stress, monetary damage and damage to the parties' credit. Some court orders are doomed to fail, causing a spouse to be in non-compliance with a judge's order.
My name is Dave Halpern, a Realtor in Louisville, KY. I specialize in preforeclosure short sales and have closed hundreds of short sales each year. I have helped many sellers in a divorce situation and have encountered problem situations that could have been avoided.
Divorce attorneys, mediators and judges often make well intentioned yet fundamentally wrong decisions regarding disposition of the house.
The two most problematic orders that I have seen are:
1. Spouse 1 must refinance to take spouse 2 off the loan.
2. Spouse 1 must sell the house by certain date.
The problems with refinancing:
a. The spouse's credit may not qualify them to refinance
b. The house may not appraise high enough
c. The interest rate may make the loan unaffordable
The problems with selling the house:
a. In many cases there is too much owed on the house
b. House values significantly declined, making many houses unsellable
c. The court appoints a Realtor who may not be an expert in liquidating "upside down houses".
A divorced seller recently contacted me in a state of panic that she is about to be thrown in jail for contempt of court because she couldn't sell her house. A quick analysis confirmed that she owes too much on her house and the only way to sell it is through a short sale. She took my analysis and explanatory material to court to stay out of jail.
A short sale occurs when the lender is willing to accept an amount short of the payoff. If done properly and professionally the lender forgives the shortage. This however could trigger a tax bill which sends the divorcing parties back to court to get the responsible spouse to pay the other spouse's tax bill.
If the lender requires to keep the borrowers obligated on some or all of the shortage, the parties find themselves back in court fighting over who is responsible for the shortage.
Since a short sale hurts the borrower's credit, how does one spouse hold the other responsible for the intangible financial damage due to a lower credit score?
All these issues and more need to be accounted for in the original court order. Divorce attorneys need to protect their clients by understanding the real estate market as it pertains to foreclosure, preforeclosure and short sales. Divorce attorneys should seek training on short sales and consult with Realtors who specialize in short sales. Agreeing to impossible terms that cannot be implemented can land their client in significant financial and legal hot water.
Dave Halpern, Realtor
Keller Williams Realty Louisville East
Dave has successfully closed hundreds of short sales in Louisville, Kentucky. Dave has helped many homeowners avoid foreclosure and bankruptcy by skillfully procuring a short sale for them. The seller has zero out of pocket costs. The foreclosing lender pays all closing costs and commissions on behalf of the seller. Many Realtors in the Louisville area refer and outsource their short sales to Dave due to his extremely high success rate.