One of the biggest problems facing couples who are getting a divorce is what should you do with your home.  In some instances, it can be a millstone around your neck. You could afford the $350,000 “dream home” and the $2,043 monthly mortgage payment that came with it on two salaries. But now that you've decided to go your separate ways, the home and its mortgage are liabilities neither of you can afford.
 
Elizabeth Weintraub, a divorce and foreclosure specialist for decades with Lyon Real Estate’s downtown Sacramento, Calif., office, says, “Divorce is one of the reasons there are so many foreclosure properties on the market today.”

One piece of advice she offers for anyone going through a divorce while trying to sell their home: “Don’t advertise you’re divorcing. If real estate agents pick up on that fact their clients will offer less for your home.” Weintraub said it’s easy for a savvy buyer’s agent to figure out what’s going on when two owners are on the deed, but and only one person’s clothes in the closet. It’s obvious the couple selling is probably getting a divorce, she said. 

Brad Brusenhan, a Dallas, Texas, Realtor® and foreclosure expert who works with divorcing couples, estimates that 50 percent of all U.S. foreclosures are directly or indirectly connected to divorce. “The most important thing a person going through a divorce needs to do and the biggest mistake they makes is waiting too long to contact someone like me to help them out,” said Brusenhan, the owner of Brusenhan & Associates.

He said most people who fall behind in their mortgages try to sell their home themselves or refinance their home to buy time. His suggestion: When you fall behind 30 days, contact someone like him. “The opportunities for success, to get the bank to accept a proposal, work out an agreement and get the house sold can be accomplished much easier when they calls me sooner than later,” he said. 

On NBC’s Today Show recently co-anchor Ann Curry interviewed Barbara Corcoran, a real estate mogul based in New York, on foreclosures. Corcoran said there are a number of things a homeowner can do to avoid foreclosure. Her suggestions include:

1. Negotiate with your bank. 
Foreclosure takes between three and 18 months, depending on your state. During that period, it’s possible to negotiate a better deal with the bank on your mortgage.

2. Negotiate a short sale.
Talk to your banker and see if he will allow you to short sell your house. That’s when it’s sold for less than the money owned on the mortgage. Then only the late payments are held against you. The loan you owed will be listed as satisfied and disappear once the house is sold at the lower price, and the bank collects its money.

3. Apply for an FHA loan as a second mortgage. 
This will give you a respite from the bank for three to 12 months. The FHA mortgage will allow you time to get current on your first mortgage.

4. Negotiate a lower variable mortage rate with your bank.
If you have a variable rate mortgage and your financial difficulties were caused when the rate increased, Corcoran suggests trying to negotiate a lower rate with the bank. If you’ve been a good customer, up until recently, the bank may provide you with a new loan you can live with. You won’t know until you ask, she said.

5. Consider renting your house.
There is always the possibility of  renting your house for enough money to pay the mortgage. This would allow you to rent a less expensive home until you worked through your financial difficulties even if a divorce is imminent, Corcoran said.

6. Return to the deed to the bank.
Ask the bank to swap. The bank gets the house and you walk away from the loan. You end up with bad credit, but it expedites the process, and there is always the possibility you can negotiate a deal with the bank to stay in the house as a renter.

7. File for bankruptcy.
This will double the time you can live in the house while foreclosure progresses. In some states, that can last almost four years. Of course, your credit will be in the tank for six years after you file. 


Don Moore is a veteran newspaper editor and reporter who spent more than 40 years working at newspapers around Florida. He recently retired from the Port Charlotte, Fla., Sun-Herald. He can be reached at donmoore39@gmail.com