Divorce and Joint Debts: What Family Law Attorneys Must Know for Mortgage Qualification

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(Follow-Up to “Authorized Users vs. Joint Obligations—Credit Details Every Family Law Attorney Should Know”)

Family law attorneys regularly confront the complexity of untangling shared debts in a divorce. In our last post, we examined authorized user accounts and why they often create confusion on credit reports during divorce mortgage planning.

In this follow-up, we shift focus to the more impactful—and often more challenging—issue of joint obligations. These debts carry direct liability, create potential credit score consequences, and can significantly influence your client’s ability to qualify for a new mortgage after divorce.

Understanding how joint debts interact with lending guidelines is essential for drafting marital settlement agreements (MSAs) that protect your client’s post-divorce financial stability.

If you have not done so already, take advantage of the free download below: The Divorce Lending Blueprint for Success, designed to help divorcing homeowners and their attorneys understand the mortgage qualifying process step-by-step.

What Are Joint Obligations—and Why Do They Matter So Much in Divorce?

Unlike authorized user accounts, joint obligations make each party responsible for the entire debt, regardless of who uses or benefits from the account. Examples of joint accounts include:

• Credit cards
• Personal loans
• Auto Loans
• Mortgages

Even if the parties agree that ‘one spouse will pay,’ both spouses remain fully liable until the account is paid off, refinanced, or through a novation.

This means a spouse trying to refinance or qualify for a new home after divorce may be significantly impacted—even when they are not the one ordered to pay the debt in question.

Court-Ordered Assignment of Debt & Mortgage Qualifying

One of the biggest concerns with court-ordered assignment of debt is determining whether a lender can exclude the monthly payment from a borrower’s debt-to-income (DTI) ratios. Mortgage guidelines offer flexibility in this area, but the rules vary by loan program.

For example, Fannie Mae provides the following flexibility as stated within their guidelines:

“When a borrower has outstanding debt that was assigned to another party by court order (such as under a divorce decree or separation agreement) and the creditor does not release the borrower from liability, the borrower has a contingent liability. The lender is not required to count this contingent liability as part of the borrower’s recurring monthly debt obligations.”

Further, lenders may ignore late payments made after the effective date of the assignment BUT pre-divorce late payments will still count.

“The lender is not required to evaluate the payment history for the assigned debt after the effective date of the assignment. The lender cannot disregard the borrower’s payment history for the debt before its assignment.”

Remember, whether a late payment is made before or after the assignment of debt, this will still impact credit scores.

Additionally, VA guidelines also offer the following relief within their guidelines:

“Debts assigned to an ex-spouse by a divorce decree will not generally be charged against a borrower. This includes debts that are now delinquent.”

Drafting Tip – Why This Matters for Family Law Attorneys:

Although mortgage programs can provide great flexibility in this topic, it will require precision and clarity in the MSA to make the most of the loan program being utilized by your client. Do not assume that general language will properly assign a debt for mortgage qualifying purposes

Remember that credit reports do not use common descriptive language such as a “2020 Toyota Truck” or “Mercedes SUV” but instead will rely upon items such as loan terms, the lending institution, and account number.

Best practice is to use what I refer to as “linking language” within your relevant provisions or exhibits that link the debt in question to the specific account on the credit report. This can include masking a partial account number, listing specific loan terms, the relevant finance company, or a combination thereof.

Above all, you must know which loan program your client is being qualified for—because guidelines and required documentation can vary between Fannie Mae, Freddie Mac, FHA, VA, and USDA, and between lenders.

🎯 Your Strategic Partner in Divorce Mortgage Planning

At Metroplex Mortgage Services, our Divorce Lending Practice Group specializes in guiding attorneys and their clients through the mortgage challenges that arise during divorce. We help:

• Avoid financing mistakes that derail settlements
• Maximize available equity for buyouts or division
• Navigate loan-to-value and eligibility requirements
• Ensure compliance with settlement timelines
• Preserve homeownership opportunities post-divorce

Need a case consultation or have questions? We’re here to help.

📞 Call/Text: 813-935-8330
🏢 Office: 800-806-9836 Ext. 280
📧 Email: SeanS@MPLX.org

To our valued family law partners—thank you for your continued referrals and trust. We’re committed to supporting your clients through the complex mortgage related issues that arise during divorce.

Florida Family Law Firm Training Sessions Available

We are currently scheduling personalized in-office and virtual presentations for family law firms across Florida. Topics include:

• Equity buyout planning
• Mortgage impacts of joint debts
• Timing considerations during divorce

Each session provides clear, practical strategies your team can apply immediately.

🗓 Contact us to book your training session, and don’t forget to download your free Divorce Lending Blueprint for Success.

And don’t forget—download your FREE copy of the Divorce Lending Blueprint for Success to keep as a resource for both you and your clients.

Sean A. Stephens, Esq., CMB^®, CDLP^® 
President | Chief Legal Officer
Metroplex Mortgage Services, Inc.

Legal Disclaimer: The information provided on this blog does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. No representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, or availability to this information. Metroplex Mortgage Services, Inc. is not a law firm and does not provide legal services. Sean A. Stephens is a member of the California State Bar #332960 and Florida Authorized House Counsel #1027099 for Metroplex Mortgage Services, Inc. Florida Authorized House Counsel may provide legal services in Florida solely to the employing business organization but is not authorized to practice law in the state of Florida and is not a member of the Florida Bar.