By Douglas Katz – 06/03/2022
You have likely heard it numerous times. Your home is your biggest asset. It is a huge component of your wealth and debt. It is the centerpiece of your life. When you buy it, you carefully pick your realtor and spend hours searching out and looking at options when you buy. You seek out the best lender to finance or refinance it, especially when you need a niche program like a construction loan. You spend hours and family capital maintaining and improving it. Shockingly, however, when divorce happens amazingly few homeowners give sufficient consideration and engage the right people to ensure that the disposition of the marital home is both the best option for everyone involved and, more importantly, a course of action is one that you can execute.
If you are continuing to read this you likely have a home, so you are probably not remembering the seemingly mind-numbing administrative and regulatory requirements required to get a loan. These do not change for divorcing homeowners. In fact, the rigidity of the process presents even more complications for potential borrowers. Everything from income to assets to titling/ownership have very specific guidelines of what is allowable and divorcing homeowners need to make their situation match the guidelines as opposed to expecting exceptions. Requirements for lenders to be objective and evaluate loans in a completely equitable manner means that planning and execution of a divorce related loan are essential. Not everyone has this expertise and mistakes will possibly cost you or, under the worst circumstances, deep six a loan and that’s just the loan.
There is, in addition to the nuts and bolts of financing and/or buying/selling a home, a need to have a team that understands the other aspects of divorce as they pertain to the home. Divorce, no matter how amicable, brings with it emotional complexity and challenges that need to be addressed and managed. This comes through experience and training. The same way that you would not go to a patent attorney for your divorce, going to just any lender or realtor can cause issues. Even if you have a relatively simple scenario, the path to resolving the housing issues will be better for you with a team who can empathize with you, show the patience and help you through what can be a painful time. Many have additional training in specific divorce issues, mediation training, credit repair training or other skills that bolster their ability to fully support you. This is not the typical call center loan officer, for example, who generally does vanilla deals. This is when you need a divorce professional who does lending or a divorce professional who is also a realtor and not visa versa.
In some cases, a divorce professional who works in job that you need can save you money. I have seen a discernable shift in the last few years to pro se and limited scope legal representation. This is actually a great option for many divorcing couples, but I see time and time again an all or nothing approach. This is usually more due to ignorance of the complexity and options available and not wanton disregard. A divorce professional in the real estate/real estate lending space can for example coach you through the process and even mediate the disposition of the home. This focused approach on this specific need is likely cheaper both in hourly rate and time to resolve versus working with a family law attorney who will likely engage a divorce lender or realtor anyways. I want to stress that this does not and frankly should not replace legal review and representation, when necessary, but if you were using an attorney in a limited capacity or not at all this does not change anything but maximize your resources and avoid possible issues.
So as you can likely see, this is exceptionally important. As I established and reiterated earlier, your home is your biggest investment, largest asset and an important part of your life. It is usually and appropriately at the forefront of your budgetary and other considerations. It should, therefore, stay in that position when you are considering or getting divorced. An essential part of this is your team and you need to have a divorce housing pro to make sure that you reach your desired outcome with a minimum number of issues, challenges and pitfalls.