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How Mortgage Loan Servicers Make Divorce Difficult

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Upset Couple 2 20150917 193252 1We don’t have to tell you how mortgage loan servicers make life more difficult ”“ that much you probably learned on your own ”“ but you might not realize that in divorce, they can be a lot harder to work with.

According to a report by the National Consumer Law Center (NCLC), thousands of homeowners across the United States find trouble saving their homes from foreclosure after inheriting the home or being awarded the home in divorce. The chief reason for the difficulty is having to live on less money, potentially leading them to fall behind in repaying their mortgage loans. Unfortunately, the protections against foreclosure for divorcees who are awarded a home in divorce are not very robust.

For many, the secret to keeping their homes is loan modification, but depending on who holds your loan and what state you live in, it can be nigh impossible to get the servicer to help, which may result in losing your home.

Recommendations for Successors to Protect Their Homes

Given the lack of protections, the NCLC has released a list of recommendations for the Consumer Financial Protection Bureau (CFPB) to consider when coming up with new rules to help protect successors from home foreclosure.

  1. Successors should be more able to access information about their mortgage without having to produce unnecessary or nonexistent documents
  2. Successors should have access to loss mitigation to protect themselves after a major upheaval in income, like that which often accompanies divorce
  3. Homeowners dealing with hardship should be able to have the foreclosure process paused to allow them a review period to help prove their status

In short, the CFPB should revise their proposed rules to help successor families suffering the difficulties and sudden life changes of divorce to protect them from the further devastation of losing their home, and finalize them as soon as possible.

Speak to a Denver divorce lawyer to determine how your marital property will be divided in divorce to help you plan for your financial future.