Removing ex wife from mortgage(s) in chap 13

[boomer2298]

Hello,

Wondering if one of our legal experts or knowledgeable people could answer this question : I currently reside in my residence that I am finishing a modification on the first. At that point, both mortgages will be current. I am divorced from my ex wife and she has signed a "quit claim" on the residence. Problem is that although the property is at roughly "break even" there is a tax abatement program that will roll the taxes back 7 years if I sell or break up the properties. I am considering filing chap 13 (as I qualify for 7 or 13 due to the large amount of unsecured debt we had) and asking if her name can be removed from the mortgages as i have a quit claim from her.
Anyone with experience or advice on this ?

[99lawdog99]

be careful, if the mortgage is currently in both names and the property was in both names when the mortgage was taken out and now there was a transfer in title to you alone from your wife, most mortgages have a clause which state that the full amount outstanding becomes due in full within 30 days if any title transfer takes place.

[boomer2298]

thanks, we have the signed quit claim but it has not been recorded. It was needed to push the modification with wells Fargo (Freddie mac) to approval. Not sure where to go now as there isn't a chance to refinance or sell as adding the roll back and closing costs would create a 38K shortfall in the closing..if sold for that. I am under court order to refinance or otherwise get her name of. It is a very messy situation. Thats why I wonder if a chap 13 judge can have her removed from the mortgage in force or what the options are as the loans will be current shortly.

[boomer2298]

I might add after mod it will go to assumptions with wells. Hoping they will do that, but PNC (2nd) has indicated they will not refinance as the loan is underwater and credit is bad. They do not hold a lien to the other two parcels that comprise the three that make up the house so their exposure is bad.

[99lawdog99]

recording the deed is not the problem as this happens often in divorce cases where one party gets the house. The problem usually occurs when the one party cannot refinance to remove the other party's name off the current mortgage and calls the bank to see if they will simply take the one persons name off the current mortgage. Once the bank knows about a transfer, it's over. Alot of times the house gets transfered, and no one knows it since the mortgage keeps being paid.

[boomer2298]

True, in this case the quit claims for the property are all known. The banks defiantly do not want the house back, and now that I am making things current they will probably have no interest in doing anything, hence the 13. Its a catch 22 situation. Can not break the properties up without triggering a 15 K rollback. one property is paid off,the other with a small land contract that neither bank has a lien or interest in. Without those properties the mortgage is underwater. Cant sell the house with out triggering the back tax lien. Only thing that will not is a "quit claim" which has been signed but not recorded. Wells Fargo via Freddie mac insisted on this to finish the mod and take it to assumptions. Neither of us has the money to pay 38K for a closing to sell it. I am currently living with my daughter here with exclusive possession. Hence my desire to see if a chap 13 judge could work this out with the banks.

[BnkrptcyLwyr]

be careful, if the mortgage is currently in both names and the property was in both names when the mortgage was taken out and now there was a transfer in title to you alone from your wife, most mortgages have a clause which state that the full amount outstanding becomes due in full within 30 days if any title transfer takes place.

Don't forget however that if the transfer to an ex-wife is made pursuant to marital dissolution/divorce, the Garn-St. Germain Act exempts such a transfer from the application of a due on sale clause (see 12 U.S.C. 1701j-3(d)(7)). The question then is whether the transfer is being made pursuant to a provision in the divorce decree.

[despritfreya]

Don't forget however that if the transfer to an ex-wife is made pursuant to marital dissolution/divorce, the Garn-St. Germain Act exempts such a transfer from the application of a due on sale clause (see 12 U.S.C. 1701j-3(d)(7)). The question then is whether the transfer is being made pursuant to a provision in the divorce decree.

In addition, even due-on-sale clauses may not be enforceable under State law and/or under bk law. See In re Garcia, 276 B.R. 627 (Bankr.Ariz., 2002)

The real problem is finding someone at the lender who can make a decision to remove the ex-spouse. Good luck with that one.

Des.

[boomer2298]

@Des, that is the very issue. Wells is modifying, but then it goes to assumption. @BNKRUPT I am under a motion for relief to refinance and get her name off with a very short time limit. The catch 22 is that I cant sell it as with all the combined entities it is under water and neither has the money to pay the difference in a sale. I am also doing this pursuant to my divorce decree. It is a very real strange situation that both my banks legal departments have never seen before with the court order and no guidance. That is why I am wondering if both mortgages are modified and current if the 13 judge can order her removed since she has signed a quit claim.

[newbie2]

@Des, that is the very issue. Wells is modifying, but then it goes to assumption. @BNKRUPT I am under a motion for relief to refinance and get her name off with a very short time limit. The catch 22 is that I cant sell it as with all the combined entities it is under water and neither has the money to pay the difference in a sale. I am also doing this pursuant to my divorce decree. It is a very real strange situation that both my banks legal departments have never seen before with the court order and no guidance. That is why I am wondering if both mortgages are modified and current if the 13 judge can order her removed since she has signed a quit claim.

A bankruptcy judge does not have the authority to remove someone from the note of a secured loan. (The "note" is the promise to pay. The "mortgage" is the instrument that records the lien.)

[99lawdog99]

Thank you for that, I did not know about the exemption., (the Garn-St. Germain Act) Is that only in a bankruptcy or in any transfer ?

[despritfreya]

@Des, that is the very issue. Wells is modifying, but then it goes to assumption. . . I am under a motion for relief to refinance and get her name off with a very short time limit. . . I am also doing this pursuant to my divorce decree. It is a very real strange situation that both my banks legal departments have never seen before with the court order and no guidance. That is why I am wondering if both mortgages are modified and current if the 13 judge can order her removed. . .

A bankruptcy judge does not have the authority to remove someone from the note of a secured loan. (The "note" is the promise to pay. The "mortgage" is the instrument that records the lien.)

Newbie is absolutely correct. Until divorce courts begin to face reality and stop ordering this nonsense, the ex-spouses will be a catch 22.

A divorce court cannot order the lender to do anything. The divorce decree is a contract between the ex spouses and is not binding on non-parties. Nor is your situation unusual and lenders have seen this a lot. My guess is that the rep who told you differently is either passing the buck or simply is not “seasoned” in these matters.

My office is dealing with this very issue and, while I am not involved, I suspect that the attorney who is, is not going to get the bank to agree as finding someone at the bank with half a brain will be impossible. In the beginning the attorney’s thought was to file the 13 (sound familiar). I then asked, "where in the Code does it give the Court authority to order this?" His/her answer was that the Court can order something done in equity. I then said "good luck". Hope he/she proves me wrong but I doubt it. To date he/she is still negotiating outside the context of a bk but I do not know the status.

Des.

[99lawdog99]

Don't forget however that if the transfer to an ex-wife is made pursuant to marital dissolution/divorce, the Garn-St. Germain Act exempts such a transfer from the application of a due on sale clause (see 12 U.S.C. 1701j-3(d)(7)). The question then is whether the transfer is being made pursuant to a provision in the divorce decree.

I just checked it out, thank you again, that is good to know.

[boomer2298]

@Des What is totally bizarre in this context is that I will soon be current on all mortgages. My ex made a motion to have me removed from the house and to stop paying on it visa vi: if I am not there I am not going to be paying on it. She is attempting to force a foreclosure so she can for her own purposes remove me and my daughter who I have split custody of out of the house. This may give her an opportunity to regain custody and raise her child support. So she has a reason not to cooperate. This has been going on for over 4.5 years, as she maximized the state alimony in PA and collected for 3.5 years, masters hearing at 2.5 years after filing dragging it out as far as it could go to collect the most money. It has been so long I have since met someone else and we are engaged. Our income is good, just have my joint martial debt hanging out here unsecured not paid since October while I try and shore the mortgages up. If I "stay and pay" short of making me put the house up for sale what else can be done if I am current?? They have no intention of short sale if I am current and can afford it which I have demonstrated I can. But I believe her lawyer in his actions to have me removed in 30 days is trying to set a precedent. How this will play out when I ever get to file BK remains to be seen.

[boomer2298]

oh, as a result of that motion all the Judge's ruling said was "you must refinance in 60 days". Not much help.