Problem Six

Ex-Spouses, Widows, & Widowers Willed or Deeded a Home Cannot Refinance If They Are Not on the Note

Problem

Only on underwater properties, ex-spouse, widow, widower or children that inherit, are willed or deeded a home through a divorce or estate of a deceased mortgage note holder are not eligible for a refinance.
Ex-spouse not on note and deeded property through divorce cannot get HARP refinance or FHA or VA streamline refinance without ex-spouse who is on the note refinancing with them on mortgage. (Do you know of many ex-spouses who would do this?) Then, when this same  mortgage holding spouse who is not on the note must short sell and the bank requires a delinquent mortgage payment, the ex-spouse’s credit is negatively affected, preventing them from getting a refinance or mortgage of their own. Therefore, the credit of two people is negatively affected.

Widows/widowers who have been willed a jointly owned property from the deceased partner but are not on the mortgage note cannot get refinance help from the lender unless they go delinquent on the mortgage. If it is an FHA or VA loan, they can assume the loan. However, the delinquent mortgage payment disallows a refinance. This is a true travesty as it occurs to elderly homeowners who have lived in home for years and are then must wait at least another year after an assumption of the mortgage is done before they can get relief. The only other option given to these non-mortgage holders is to short sell the property.

Solution

  1. A  specific mortgage program exception is needed to allow the remaining mortgage holder usually on title and deed to be allowed the same underwriting criteria singularly from ex-spouse or widow/widower. This is an unprecedented problem never before faced where remaining mortgage holders are unable to refinance due to negative equity.
  2. Additionally, there should be a specific underwriting exception where a HARP ex-spouse deeded a property and who qualifies for HARP should be able to refinance in their name only. This is also necessary to preserve the credit of the ex-spouse, who deeded the property in the divorce in good faith not expecting that this would affect their future credit. 
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