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I'm currently a pregnant stay at home mom with one daughter and excellent credit. My husband came home 1 month ago and said, "I want my old life back". We are now headed for divorce. We just bought a house last year for 700,000 - it's probably lost $300,000 equity. ($100,000 being our entire down payment that took ME 10 years to save before I married.) So I'm in a horrible pickle.
Houses are foreclosing all around us! Why did the banks dole out loans to people who could not afford them, causing this horrible run up? Did they not foresee what would happen? I am shocked to hear about these no doc loans/no down loans, etc. My neighbor in forclosure got a $700,000 loan and was unemployed, with no down! He's walking away and loses nothing! What kind of bank makes those kind of loans? There was no incentive for him to stay if prices went down.
Now the banks are tossing houses into auctions without any marketing, staging or lawn mowing - driving the prices down further. Further making it impossible for honest people who need to sell to do the right thing. We could not have foreseen or known that the banks were operating this way - or would operate this way. When we bought, I didn't think I was putting it all on red. I honestly thought the loan officer and appraisers were doing their job to protect both of us.
I've now got 6 bank owned houses on my block alone with brown lawns and crab grass!
In normal circumstances, without bloated bank-caused price inflation, we would just sell. I was prepared - with mild market downturn - to lose our $100,000 down if something happened and we could not stay. Well that something happened, and now the houses are going for half! Yes half!
What are my options? I know I'll have to go back to work after the baby is born - and I'll probably get around $4,000 per month in child support/alimony. But that is not enough to pay for this home on my own, and my ex won't be able to afford to pay with those kind of payments after the Divorce - we need to sell. Staying together apparently isn't an option - he wants out.
I'm so mad at him, but I'm equally mad financial institutions being so careless! If everyone had to come up with 10% and have good credits and jobs - this would have NEVER happened.
So I really need advice. I would like to keep my good credit and my 401K plus small stock investments. I'll be a single mom with 2 kids.
My ex says he'll refi the house in his name only - but thinks he'll eventually have to "walk away", ruining his credit. He might be bluffing - I don't know. He doesn't care - he just "doesn't want to be a family man anymore." At this point I couldn't care less about his credit.
Questions:
1) Do we need to divorce or seperate first before he refinances and gets me off title and loan docs, or can I start the procedure now? Will I still be liable if it goes through forclosure after my name is off, but before divorce is final?
2) I'd like to stay in the neighborhood. And with prices being slashed every day - I can foresee being able to buy another home with my child support/alimony payment of $4,000. The ex said I could keep my stock - that I had before we married. So I could come up with the $25,000 for a 10% down on a townhouse. Once we are legally separated, will I be able to buy another place on my own for my children and I - or do I have to wait for the divorce to go through?
First of all, I would like to say that I am sorry for the situation that you are in...could not have come at a worse time. However, it appears that you have a very level head on those shoulders and commend you tremendously for that. I assume that you are in CA (from your ID) and CA is a community property state. My suggestion is to consult with a family lawyer who will be able to help you not only on the family law in CA but the effect of the financial obligations as well. It seems that from the assets plus the child who would be in the picture that you should be represented by legal counsel. If you retain one now, this should be part of the consultation toward the rest of the process. I think that if you make a mistake or take wrong advice that it could bite you later. My initial thinking is that if he manages to refi in his name, the loan would be vested as So-and-so, a married man as his sole and separate property, which might override the community property provision. Again, since I am no lawyer, best to seek legal counsel.
For some reason, the homes that are sitting on the market $150,000 over current prices are short sales - I'm not sure why. It isn't until foreclosure that the banks will sell it or auction it for the going price. This process seems to be taking about a year in my area when people try to short sale - which just isn't working.
He's feeling really guilty right now, and makes over $170,000 - so I'd like to shore this up while he still feels responsible for what he is doing to our family. Before he finds a new woman and starts to hem and haw about C/S -Alimony payments because he can't afford to take his new gal to Hawaii.
I then think once we both go into short sale together - I'd be forced to go through foreclosure with him - which would ruin my credit, and allow him time to feel less crappy about what he's doing. I'm really trying to look out for my children and at least provide a decent home, even though I couldn't provide a decent dad.
I am so very sorry you are dealing with this situation. My heart truly goes out to you. The fact that you are pregnant must make it so much the harder.
I have no knowledge of things like this as far as the real estate market and so forth goes.
I think he'll go along with whatever I ask for right now - probably have a guilt window of about 2 months - that's when I deliver. After that who knows. But right now I just want to get the divorce over and done with while he still feels bad.
Does anyone know of any low cost legal services that we could use that are schooled in real estate law? I really don't think there will be any push back - so it should be fairly easy.
Also, how much does a divorce usually cost in California when it's uncontested and the husband just says yes to the requests?
Lastly, we loosely agreed on $2000 child support, $2000 alimony, Which he says he'll pay for the next 18 years, regardless of where I end up working. Seems really generous - is it? He get's the house, which he said he will refinance in his name only. But will the banks let him refi if it's worth half?
Since my income wasn't a factor in the initial loan, will they let him drop me from the paperwork?
I'm very sorry to read this... and I'm not an attorney so I can't provide advice or recommend counsel. I hope things work out for you.
My company is based in California and I know many co-workers who are in a similar financial situation as you. For a while, before the run up, we actually had retention problems with employees because people were cashing out their homes and moving to places like Kansas, Nebraska and Missouri. Yes there is blood on everyone's hands and both borrowers and lender are to blame. It's just wrenching when you hear how it affects a bystander/homeowner that has invested well and been responsible with their payments. A single foreclosure can kill a neighboring comp price. Two foreclosures can kill an entire neighboorhood of comps.
CaliforniaMomSF,
I am really sorry to hear your story. You are certainly an innocent victim of this housing mess which was, as you accurately stated, perpetrated by loose lending standards.
Are both children his? I assume they are, but he almost sounds like a man who has never dealt with a baby before and now has no clue what to do. So is it possible you had a 5 or 6 yr old when you met him, and he has some sort of odd baby phobia now that a new one is on the way? I am just guessing here. Strange behavior after so many years. How long were you married? That will certainly affect the amount and length of alimony you get. Child support is based on a state calculation.
Regardless...being upside down on the house, it would be my opinion that the sooner you get your name off title and off the mortgage the better. And yes I would be very suprised if they let him refi since it sounds like you have negative equity. Quit Claim? You need a real estate attorney and a family law attorney.
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Will walk away
Short sale
