Spouses who are about to undergo a divorce find themselves also facing a possible foreclosure on their property. Depending on if one partner wishes to retain the property as part of the divorce settlement or both partners want the house, you will have some choices to stop the foreclosure from occurring. One good way is to have your divorce lawyer to draw up a master divorce agreement. This will outline how the property is to be divided in the case of a divorce. Your divorce lawyer will help you decide if this is the best way to stop foreclosure from happening.
If you are already late in your mortgage payment but are able to make the payments then a refinance loan may be the right option for you. The lender will be more than willing to work with you to ensure that you can make your mortgage payment each month. When a spouse refinances they are taking on the debt of the other spouse which can prevent foreclosure of the property.
Another option is to apply for a refinance on the existing mortgage. In this instance one of the partners will need to provide documentation that they have been able to pay the mortgage in full. One of the partners may want to add the new spouse as a new primary mortgage holder on the property. When applying for a refinance with the lender, they will want to know exactly where the money is coming from. This is so they can determine if the interest rates are right for both individuals and not just one person.
One final way that you can stop a foreclosure is to have a 'no due-on-sale clause'. It states that the bank cannot auction the property unless there is a full and final signed purchase contract. This can be a very tricky option when dealing with a divorce because if one spouse has a 'no due-on-sale clause' it could give the lender leverage over the other spouse. However if there is no option for a due-on-sale clause in a mortgage contract one of the spouses can apply for a loan with a due-on-sale clause.
There are many ways to stop a foreclosure and one of the easiest is to stop the sale of the property by entering into a mortgage agreement. If a couple has a mortgage contract at their fingertips, they can enter into a mortgage agreement and stop the sale of the property. If a couple enters into a mortgage agreement but the contract does not contain a 'no due-on-sale clause', the lender can proceed with the sale of the property. The same is true if a promissory note or debt contract exists but it does not include a clause that would allow the lender to take possession of the property without first holding a deficiency judgment. A deficiency judgment is a lawsuit that is brought by the lender against the borrower for the balance of the mortgage.
In either situation, once the lender takes possession of the property, the proceeds from the sale of the property become the responsibility of the plaintiff. Usually a lender will not pursue a debtor for the proceeds of a sale if it is not able to collect on the mortgage loan. One spouse may be held financially liable for the entire mortgage amount while the other spouse has only a promissory note or debt obligation. The best thing to do is talk with an attorney experienced in divorce and foreclosure law. He or she will be able to help analyze your specific case and recommend the most effective solution.