Get educated. What does that consist of? If you’re contemplating divorce and you own a home that one of you wants to keep, and the other is agreeable to that arrangement, then you’ve got to find someone with the right qualifications to advise you on the best way to accomplish that goal. Or even if it’s possible. Such a qualified lending professional doesn’t necessarily have a finance education, but should have the right experiential background.
How do you verify his or her experience? You have to ask questions, and they have to be the right questions. If she answers you by telling you stories about situations she’s encountered, both when it was too late (far too common) and when it was not, then she probably has the right experiential background. How many loans or purchasing refinances has she closed? How many in which the clients were in the midst of divorce? In other words, how many divorces has she been called in on?
How many divorce lawyers can recommend him or her? Ask for that contact information. Can he provide the names of any clients with whom he worked during that client’s divorce?
Then don’t stop short by obtaining the names of those references; actually call several of the clients and verify what the lending professional accomplished for them.
So educated about what? You’ll want to find out what your loan options are before your divorce is final, whether you’re moving out of the marital home and buying somewhere else or staying on the home and expected to refinance the loan to remove your spouse from that debt. Why before? Because the terms set out in your final judgment of divorce can either foster your goal, or prevent it. So find out what the terms should be and then work with your spouse to set it up in a way that will satisfy you both.
One day, a professional in my community called my office. As I picked up the phone, I swung my chair around to face the bay outside my seventh floor floor-to-ceiling windows. Took a moment to drink in the amazing view, which I normally keep behind me, to avoid losing myself in it. Recalled how I had met the attorney in the first place.
He’d had a client, the former wife, consult with him after her divorce case had finally concluded. The couple had settled their divorce issues in mediation, but now things weren’t going as she and her husband had anticipated and they were back in litigation. The husband had accused her of contempt because she had failed to refinance the marital home and he, therefore, had not been able to qualify to purchase his new home.
“Why before? Because the terms set out in your final judgment of divorce can either foster your goal, or prevent it. So find out what the terms should be and then work with your spouse to set it up in a way that will satisfy you both.”
Their trial attorneys had neglected to inform either of them, but especially the husband, who planned to leave the home, and whose final judgment therefore ordered him to deed his interest to his soon-to-be-ex, that she might not be able to get him off the note and mortgage. His former wife wasn’t going to be able to refinance the loan.
By the time I consulted with her, it was too late. The final judgment had been entered and, although they might have negotiated for this had they known, its terms now did not enable her to refinance. And her husband was too angry now to consider renegotiating the agreement.
He had lost his order to show cause why she should not be held in contempt because she was not purposely flaunting the requirement that she attempt to refinance. She was simply unable to accomplish that goal, as I was happy to explain to the judge when I was called as her expert.
And, of course, it was costly for both of them to litigate the order to show cause.
So I took the call, anticipating a new client. When I greeted the lawyer at the other end, he announced, without making any small talk, “I’m sending my client to see you. We’ve just come back from mediation and we made a lot of headway but we got hung up on the marital home. He wants to sell it because his wife won’t be able to qualify to refinance it. At least he doesn’t think so, but I know you’ve worked magic before so can you see what you can do?”
“Of course, I’m happy to do that,” I responded. I went on, “What are the chances that he can bring his wife with him?”
“That’s not a problem” he answered blithely. “This is a collaborative matter. I’ll just talk to her lawyer and we’ll designate you as a neutral.”
The husband came in that afternoon, with a petite brunette he introduced as his wife. (She made no comment, but he grimaced as he said this, which I ignored.) He was a tall man, who grinned nervously when I showed him to an armchair, facing the water and the sunshine out the window. He was obviously anxious to get through our meeting, as well as his divorce process. While we talked, he stared out the window, eyes unfocused, legs crossed, and foot bouncing.
His wife, sitting in the matching armchair, was more focused, her bird-like eyes watching me intently as I spoke, her initial stillness almost disquieting. She had pulled a notepad out of her bag, and poised her pen, ready to write.
I clarified what his attorney had shared about their goal for the marital home, and what I do for a living. When I honed down on the issue with which I understood they were wrestling, I explained that support will help qualify his wife to refinance the marital home. Astonished, he jerked his attention back to me, sitting up straight. “What? Child support, too?” he exclaimed, somewhat loudly.
“Sure,” I explained. “Alimony will qualify her to refinance the home loan, but so will child support.”
“What do I have to do,” he interrupted before I could continue, “to make sure that happens?”
“Great question,” I assured him. “The typical standard is that child support, and alimony, too, will qualify as income that the bank will rely on if it’s been paid for six months, and if it will last for three years or longer. So your final decree must detail the amount of support, the frequency of the payments, and any anticipated future changes to be used to qualify the loan.”
They looked at each other. “Wow,” he commented, bemusedly. “I didn’t know that. My lawyer told me that but I didn’t believe him.”
“Well, there are plenty of people who’ve done it the wrong way.” I clarified, “The rules are pretty specific; you have to be able to prove regular receipt of that support, whichever kind it is, for six consecutive months. You shouldn’t even apply to refinance until at least six months after your support payments have begun. Therefore, unless you’ve been paying temporary support sufficient to qualify her for the refi, play it safe and provide for alimony or support for at least four years after entry of the final judgment.”
“Sure,” I explained. “Alimony will qualify her to refinance the home loan, but so will child support.”
“Is there anything else I need to do to guarantee that she can refinance the home loan?” he probed, excited now.
“It will help if you can change any of the jointly-held debts out of her name,” I continued. “And you can’t just provide that you’re ‘responsible’ for them, if they are still in her name. If they’re still in her name,” I repeated, “they will hurt her ability to qualify.”
“Wow,” she now said, putting her notes away. “You’ve given us so much to think about.” They stood up together, clearly on the same page, and ready to move forward with a new game plan. “Thank you so much.”
He imitated her, shaking my hand with a firm grasp. “Thank you for your time. Can we have you run the numbers to figure out how much support she’ll need to qualify for the refi? And can we come back to you to handle her refi when the time comes? And my new home loan, too?”
“Of course, you can. I’ll be happy to help.”
I’m always happy to help, when it’s not too late.
Need advice now? Contact Joryn!
About this week’s author: Joryn Jenkins and Allen Weinzapfel.
Joryn, attorney and Open Palm Founder, began her own firm here in Tampa after a 14-year career in law while also serving as a full-time professor in law at Stetson University. She is a recipient of the prestigious A. Sherman Christensen award, an honor bestowed upon those who have provided exceptional leadership to The American Inns of Court Movement. For more information on Joryn’s professional experience, take a look at her resume.
Allen Weinzapfel, the Purchase Lending Manager at CBC National Bank, is a dedicated and accomplished home financing specialist. Allen has over 7 years of experience in home lending, 6 of which has been spent dedicated to family law. Using a proactive and educational approach to achieving specific home financing goals, Allen has helped numerous clients transition through divorce and avoid financial ruin. Contact Allen at ateam@cbcnationalbank.com.
