In Georgia, it often occurs that one party wishes to retain the marital home after a divorce. If the Husband and the Wife’s name are both on the mortgage loan documents as the borrowers, the question then becomes how to remove the name of the party relinquishing their interest in the home so that they are no longer liable for mortgage payments. Even in divorce situations, most lenders are unwilling to remove borrower’s names from loans because it leaves them less recourse in the event of a default or a foreclosure. To remove a party’s name in these situations, the loan either must be satisfied in full or the party wishing to retain the home must refinance.
When a home mortgage is refinanced, the existing mortgage is replaced by a new mortgage that has different terms. This process is frequently used to, among other things, achieve a better interest rate or consolidate debts. In a divorce situation where both party’s names are on the mortgage loan and one party is to retain the home, the party who is keeping the home is often required to refinance the mortgage into their name only. In today’s struggling real estate market, refinancing has become a problem due to the number of people who owe more on their home than it is worth. In these situations, a solution may be the Home Affordable Refinance Program (HARP).
HARP is a federally run program that allows eligible parties with mortgages owned or guaranteed by Fannie Mae or Freddie Mac to refinance their homes to a lower interest rate, even if they owe more on their mortgage loan than their home is worth. Eligibility requirements for borrowers wanting to utilize this program include, but may not be limited to: (1) zero missed payments in the last six months, (2) no more than one missed payment in the last twelve months, (3) a current loan-to-value ratio greater than 80%, and (4) no previous refinances under HARP. To determine if your current mortgage is owned or guaranteed by Fannie Mae or Freddie Mac, visit www.fanniemae.com/loanlookup and www.freddiemac.com/mymortgage.
If you are dealing with how to best address the issue of your marital home during a divorce, or are facing contempt action on a Final Judgment and Decree due to your inability to refinance the marital home, we recommend you contact one of our Atlanta Divorce Lawyers to assist you with this process.
By: Courtney H. Carpenter, Associate Attorney, Meriwether & Tharp, LLC