From Shut Out to Ready: The One Document That Matters When Your Ex's Loan Still Has Your Name
Sharon went from believing her ex-husband's old mortgage had shut her out of buying a home near Calabash, to knowing the one document that matters and the exact question to ask her lender. Sharon is a fictional buyer, but her situation comes up often, and the answer is worth knowing before you ever talk to a loan officer.
Where Sharon started
Sharon is divorced. Her name is still on the old house loan she and her ex-husband once shared. Her divorce decree orders him to make the payments on it. As far as Sharon was concerned, that meant she was stuck. If her name is on the debt, she figured, a lender would treat it as hers, and she would have to prove he was paying it before anyone took her seriously.
That worry is common. A decree is an order between two former spouses. The loan is still a loan with a name on it. So buyers in Sharon's position often assume the old debt closes the door, or that they must chase their ex for a year of payment records.
What the FHA guideline says
For an FHA loan, the guideline speaks to this exact situation. Here is the text, word for word:
"When a contingent liability is created by a divorce decree or other court order, evidence that the other legally obligated party has made 12 months of timely payments is not required. The Mortgagee must obtain a copy of the divorce decree or other court order ordering the spouse or other legally obligated party to make payments."
There are two parts to that. First, the 12 months of timely payments from the other party is not required when the liability comes from a divorce decree. Second, the lender, which the guideline calls the Mortgagee, must obtain a copy of the decree or court order that orders the other party to make the payments.
Why the decree is the document that matters
Sharon does not need her ex-husband's cooperation to build a payment history. The guideline points to the court order itself. That changes what she does first. Instead of calling her ex and asking for statements, she gathers her own paperwork.
The key page is the one that assigns the debt. Your decree may be long, and the part that says who pays what may be a few pages in. That is the page the lender needs to see, and it is why I recommend providing the complete decree rather than a single page you pulled out.
The exact question to ask
Here is what Sharon learned to say to her loan officer:
"My divorce decree orders my ex-spouse to make payments on this debt. Under FHA guideline Section II.A.4.b.iv.L.2, 12 months of payment evidence from the other party is not required for a contingent liability created by a divorce decree. Can you confirm you have obtained a copy of my decree?"
Then she provides the complete decree showing the page assigning the debt. That one question puts the focus where the guideline puts it: on the court order, and on the lender's duty to obtain it.
What this does and does not tell you
Be careful not to read more into it than it says. The guideline addresses the payment evidence from the other party and the requirement that the lender obtain the decree. It does not promise approval. A mortgage file still has other pieces, and every situation is different. What the guideline gives you is clarity on one point that stops many divorced buyers before they start.
What you can do today
First, find your complete divorce decree. Second, locate the page that orders your ex-spouse to pay the debt, and mark it. Third, when you speak with a lender, use the question above and listen to the answer. If a loan officer cannot confirm they will obtain your decree, that tells you something about how the file will be handled.
If your name is still on a debt a court ordered your ex to pay, you do not have to guess where you stand. I am Jason Sharon, a licensed mortgage broker, and I find the path. I am licensed in North Carolina and South Carolina, and I am glad to walk through your decree with you. Call 843-LOW-RATE.
Home Loans Inc - Jason Sharon, Mortgage Broker. Company NMLS #1728740, Jason Sharon NMLS #1281448. Equal Housing Opportunity.
Learn more about this loan program: From Shut Out to Ready
