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Article from Bankruptcy Law Network

It’s common for a divorce decree to award the marital home to one spouse or the other, with the spouse who is keeping the home being ordered to continue the mortgage payments until the mortgage is fully paid. However, this raises the question of whether the now “homeless” spouse can qualify for a mortgage to purchase a new home, even while that spouse continues to be liable for the mortgage payments on the former home.

Often, this problem is addressed in the divorce decree with a provision requiring the spouse who is keeping the home to refinance the entire mortgage within a short time after the divorce. Many times, though, the divorce decree is silent on this question, and the mortgage may remain an obligation for both spouses long after the divorce is finished.

The good news is that HUD Regulation 4155.1 4.C.2.f, which governs FHA mortgages, addresses this common scenario. This regulation states that the contingent liability of the ex-spouse for the future payments due on the mortgage on the home now owned by the other spouse is not be counted if the loan was foreclosed

Divorce is not considered an extenuating circumstance. An exception may, however, be granted where a borrower’s loan was current at the time of his/her divorce, the ex-spouse received the property, and the loan was later foreclosed.

Note: The inability to sell the property due to a job transfer or relocation to another area does not qualify as an extenuating circumstance.

Carolyn Secor is a Clearwater bankruptcy attorney and Clearwater foreclosure attorney serving Palm Harbor, New Port Richey, Oldsmar, Tarpon Springs, Seminole, St. Petersburg, and the Tampa Bay area.

If you would like more information on our practice, please consult our website at or call 727-335-7151.