Doing Divorce Right By Chief PeaceKeeper™ Scott Levin
Scott Levin is a divorce attorney and divorce financial expert who has dedicated his career to helping couples and parents resolve disputes through mediation so they stay out of court and stay in control. Protecting children is at the heart of Scott's work as a mediation divorce specialist. Scott shares tips and advice for couples and parents wanting to learn how to divorce amicably without going to court. As a family law attorney in San Diego, California, Scott has more than two decades of experience and stories and tales to share and an incredible array of unique and interesting guests that join him to share their own ideas and experiences. We discuss the benefits of divorce mediation and the reasons why couples navigating divorce should choose peace and opt for the mediation process as opposed to hiring divorce lawyers and entering the litigation battlefield. Known by colleagues and clients as the Chief PeaceKeeper™, Scott is the founder and managing partner of San Diego Divorce Mediation & Family Law, a firm with hundreds of 5 star reviews from couples who have benefitted from Scott's legal and financial expertise and caring approach over his many years in the field. Learn strategies to tackling divorce and co-parenting disputes through a team approach with Scott Levin.
Doing Divorce Right By Chief PeaceKeeper™ Scott Levin
Unlocking the Mysteries of Mortgage Loan Assumption in Divorce
Discover the key to navigating the complexities of mortgage loan assumptions during a divorce with the guidance of Family Law Attorney Scott Levin and Tami Wollensak, an expert Certified Divorce Lending Professional (CDLP®) who demystifies the process for homeowners looking to keep their favorable loan rates. This discussion will help unlock the mysteries of mortgage loan assumption, how it works during a divorce, and the steps involved in the process.
As interest rates soar, the wisdom shared in this episode could save you from the financial strain of refinancing. We discuss the essential steps to determine if your loan is assumable and the pivotal role your mortgage servicer plays. Listen as we shed light on how to determine if you can qualify, what is required to do so, and the importance of having a fallback plan, given the unpredictability of qualification.
The insights provide not just a lifeline for those entangled in the throes of divorce but also a beacon of hope for preserving one's financial health in the face of adversity. Join us for an episode rich with strategic advice that could mean the difference between a smooth transition and a rocky financial future.
As a Mortgage Loan Originator, Tami’s goal is to educate her clients, take the mystery and anxiety out of the mortgage process, and provide a sense of security and peace to each of them. Tami can lend in all 50 states. (NMLS #1963450). Schedule a call to learn more at www.tamiwollensak.com or email her at tami@tamiwollensak.com.
Thanks for listening and I hope you'll continue to learn more about how you can peacefully divorce.
As a divorce mediation attorney in California, Scott Levin helps couples figure out the settlement terms and draft enforceable settlement agreements so they can divorce fairly without needing to go to court. Obtain closure peacefully through an amicable divorce. process that protects families and kids.
Visit San Diego Divorce Mediation for more information and to learn more about our mission to help divorcing couples make informed decisions and fair agreements through mediation or book a free virtual consultation.
Scott Levin, attorney, mediator, CDFA®
Chief PeaceKeeper
scottlevinmediation@gmail.com
858-255-1321
San Diego Divorce Mediation & Family Law
www.SanDiegoFamilyLawyer.net
I think. Hey everyone, this is Scott Levin. I am a mediator and family law attorney in California and since the rates have really gone up over the last I don't know year and a half or two in terms of mortgage loan rates, more and more of my clients are trying to figure out, you know, how to assume a loan on a primary home so that one party can own the house without having to refi the loan. So basically, at the end of the loan assumption process, one person's the owner and only they are on the loan, and the other person, their former spouse, is no longer attached to that loan in any way and they keep the loan rate that they had originally. So a very different process than refi a loan, which obviously resets the rates.
Speaker 1:And I am joined today by Tammy, who is an expert in this field and helps lots of people understand loan assumptions. And I guess Tammy I've talked long enough Tell us how does someone know, or what are the ways for them to know, that if they can assume a loan, yeah, thanks, scott, this is such an important topic.
Speaker 2:And when then I get, literally every time, somebody jumps on the phone with me, they might not know that word assumption, but exactly what you said. That's releasing one party from liability on the loan itself and allowing them to keep the term. So they asked me can I assume my mortgage? I cannot tell you whether or not you can assume your mortgage. Here's the thing Every mortgage servicer, the person that you write your mortgage payment to, that person, that entity, that company, is the only one that can tell you if your loan is assumable. You cannot call your loan officer. A lot of times they don't even know. You need to call the servicer. So call them, and then you say here's the thing, the key is, I am going through a divorce. That's the trigger to sometimes servicers allowing this to happen, so that you say I'm going through a divorce, is my loan assumable? They're going to say yes or they're going to say no, and then you're going to know whether or not, how, what the next steps are.
Speaker 1:You know it's interesting in my practice. So if they say yes, that doesn't mean that they're saying it will happen. They're saying it's possible, it can happen.
Speaker 2:It's a possibility, yeah.
Speaker 1:It's a divorce mediator. When I'm working with both sides to a divorce and helping them arrive at settlement terms Oftentimes one person who wants to assume a loan we have to basically project forward what the agreement terms are going to be if that happens. But at least in California the loan assumption process really doesn't get started. They don't let you apply until you have a signed settlement agreement. So it's kind of like you have to have option A if this happens, but then you have to have option B in case it doesn't, because you won't know if it will or won't. What are some of the factors that are most important to it? Is there a set of factors that are more important to institutions allowing an assumption?
Speaker 2:Well, it is what's called a qualified assumption. So if you have two people that are originally qualified for a loan, with both of their income, both of their assets, both of their credit, and now you're going down to one person, they want the lender wants to ensure that that one person can carry that debt right and that they're not taking more risk by eliminating or releasing liability from that other person. So they're going to make that person go through a set of qualifications. So if you have any credit issues, if you're going to be receiving support in any way or capacity, if you are not sure if you have any contingent liabilities meaning liabilities that you might be taking on or other liabilities since you took out the loan all that stuff is going to come into play. So having a plan B is absolutely critical in this situation is to not just saying, oh yeah, my loan is assumable. You have to be very comfortable with the fact that you're going to qualify to do that, or have a plan B for sure.
Speaker 1:Is there an option, when you do a loan assumption, to pull out any equity as part of that process?
Speaker 2:Absolutely not, and this is really what's really important. There is some statistic out there. I wish I could quote it, but more people have more equity in their homes today than in decades. Right, there's more home equity that's available and that's really the asset. That's the amount of money that people are negotiating. So for quick numbers, let's say you own a home. It's worth a million dollars. I'm saying this because this year in California, right? So a million dollar home with a $500.
Speaker 1:Don't tell you what they used to.
Speaker 2:There isn't anything other than that A million dollar home, $500,000 loan balance. You're negotiating $500,000. Right, that's the asset, the equity in the home. If you're assuming the mortgage, all you're doing is taking on the current debt of the $500,000. You have to negotiate that other $500,000, maybe $250,000 and $250,000, whatever that ends up being. However that's negotiated, you have to take care of it another way, through either other assets, some other version of taking care of that. You cannot roll any of it into a new mortgage.
Speaker 1:Does the person who's coming off the loan in an assumption process have to sign any paperwork?
Speaker 2:Yes, when somebody is assuming that current debt, then they're releasing liability of the other person. They're also releasing their ownership interest in the current home. So they're quick, claiming off the deed.
Speaker 1:So they're saying If the deed still is in both parties' names during the assumption process, the institution will prepare that paperwork.
Speaker 2:They don't really prepare it, but they want it recorded.
Speaker 1:Yes.
Speaker 2:They'll have. You usually have a real estate attorney or somebody prepare the deed itself, but it does need to be recorded that this person is not only releasing liability of the mortgage but releasing their ownership interest in the home as well.
Speaker 1:So we talked about how it happens. We talked about some of the processes for doing that. I guess my next question is what are some of the pitfalls that might exist in arriving at a loan assumption?
Speaker 2:So I tell people there's three things that they really need to be asked questions and be comfortable with Do I qualify? It would be number one Is it going to, Am I going to be able to qualify for this assumption? Number two is what are the costs and the fees that come along with this? I've heard upwards of several points, and a point is a 1% of the loan principle balance. So in one person's instance that came back to me, I tried to get a lot of information around this. They wanted three points to do this and it was going to cost that client $10,000. So this is out of pocket. You're not getting a new loan. So it's not like these things can be rolled into a new loan. This is a check that they wanted upfront.
Speaker 1:I guess there's no competition right. You're either getting an assumption from the current institution or you're not.
Speaker 2:That's it. Yeah, so they have their own set of parameters, guidelines and fees. And then, what's the timeline? Because you don't want to put in your settlement that you're going to do this in 60 days, 90 days, if they're waiting six months to do this, and I know some large banks that say it's a six-month process. So make sure you don't put that you're going to do this in 90 days if it's going to take six months, just to find out.
Speaker 1:And that's also something that if you're working in divorce with an attorney or mediator, however you're processing it, you have to hire someone that really has genuine expertise and experience, because that comes up all the time in my practice, where one person wants off and they're negotiating a buyout and they're really focused on the money right and when they're going to get it, and that's the part of the negotiation. But then in terms of when they're coming up alone and when they're coming off title, I often say, hey, I know you want to do it in 30, 60, 90 days, but we can't put anything in this settlement agreement that's enforceable and by the courts that that's going to trigger the end date prior to when I know that it's going to the assumptions going to happen. If this function I know is going to happen after the end date that we're putting in, that's called a bad deal for everybody 100%.
Speaker 2:I see it all the time, scott, and it's really tragic. I had somebody that come to me that was trying to do this process and she was receiving support and it was a six month waiting period by the time she'd been told no by the servicer. She also didn't have the amount of continuance that me as a lender, that I need in order to use that as income. So the only other option that was in her settlement was to sell. So it was either assume it or you have to sell. So she had to sell.
Speaker 1:And was she considered the sole person at that point, the owner, or were they both owners?
Speaker 2:She was. In their settlement it was listed that she would assume the loan by a six month period of time and that she was the sole owner. That she would have to split the proceeds, though, from the sale. Oh, man.
Speaker 1:Well, there's lots of stuff.
Speaker 2:It was a bad deal for her in general.
Speaker 1:Yeah Well, listen, there's a lot that we could go into in greater detail about this loan assumption. The primary home is often the biggest piece of the pie when you're going through divorce, and the reason that we wanted to discuss this today, tammy and I, is because loan assumption is a unique option. It's something that is available to many people, but it does take a level of planning and guidance and expertise to kind of think through, and there's no doubt that Tammy has all of those things. So I encourage you to reach out. We're going to put all of our information in the description here, but, tammy, any last words?
Speaker 2:No, I think that being a better making, a better informed decision regarding this is going to be give people peace of mind as they move forward in their next chapter, absolutely. So thanks for having me. I appreciate it.
Speaker 1:Thank you See y'all soon.
Speaker 2:Bye guys.
