Today, however, many divorcing couples are finding the home an albatross, and often neither spouse wants to have the burden of owning an undervalued property. In many parts of the U.S., values have shrunk so low that the home cannot be sold. Without the ability to use the equity in the home as an equalizer in the division of assets, settlement negotiations can be more challenging.
Options Available
There are, however, several options available to divorcing couples in this situation. These include sharing joint ownership of the home or renting the property until the housing market rebounds. The couple could also elect to give ownership of the home to one spouse and factor in the negative equity in the overall marital property division. Another option is called a short sale. This is where the couple sells the home at a loss and negotiates with their mortgage lender regarding how the loss will be split between the parties and the bank. Unfortunately, short sales usually negatively impact a couple’s credit.
If you are facing divorce and have an underwater mortgage contact an experienced family law attorney. A lawyer can discuss the available options with you and work to find a solution that meets your family’s needs.
