Debt After Divorce in Florida – How Does Court-Ordered Assignment of Debt Affect Mortgage Qualifying?
Part 2: Debt After Divorce in Florida – How Does Court-Ordered Assignment of Debt Affect Mortgage Qualifying?
Divorce can have significant financial consequences, especially concerning mortgage eligibility. Previously, we discussed Debt After Divorce: The Basics (Part 1), highlighting insights into managing joint obligations and authorized user accounts. Today, we’ll focus specifically on the impact of court-ordered assignment of debt—a critical aspect of divorce mortgage planning. Understanding the implications of how debts are allocated during divorce proceedings is essential for individuals aiming to refinance or purchase a new home afterward.
Before we dive deeper, don’t forget to download our free Divorce Lending Blueprint for Success. This comprehensive guide walks you step-by-step through the divorce refinance process and serves as an invaluable resource for both homeowners and attorneys.
Court-Ordered Assignment of Debt
A common challenge following divorce is dealing with court-ordered assignment of debts. Depending on the type of joint obligation, the loan program chosen, and the terms agreed upon in the marital settlement agreement (“MSA”), this will factor into the ability to exclude a joint obligation from mortgage qualifying ratios. Unless the MSA particularly links the obligation with proper identification of the debt to be excluded, lenders may still consider both parties liable for the debt.
Additionally, if your ex-spouse is responsible for a debt per the divorce decree but fails to make timely payments, this unpaid debt can negatively impact your credit score and overall mortgage eligibility.
Resolving Common Drafting Challenges
Precise wording is critical to help prevent mortgage qualification issues. If a divorce decree does not clearly outline who is responsible for which debts, lenders may treat all joint debts as the borrower’s liability. Being able to link a specific account to a credit report is critical. Remember that credit reports do not use descriptive language such as a “Blue BMW” or “Green Chevrolet” but instead will reference terms of the loan or account numbers. Proper documentation of who is paying the debt improves the ability to gain mortgage approval.
How Our Divorce Lending Practice Group Can Help
As a Certified Divorce Lending Professional (CDLP®) and chair of our practice group, we have built a dedicated team of divorce mortgage professionals.
Our dedicated team of divorce lending professionals will walk you through the qualifying process step-by-step. Just call, text, or email to discuss your scenario and let our Divorce Lending Practice Group go to work for you.
Call/Text: 813-935-8330
800-806-9836 Ext. 280
SeanS@MPLX.org
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As always, I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!
P.S. – You can download our “Divorce Lending Blueprint for Success” by CLICKING HERE.
