Short Sales and Foreclosures in Divorce

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When people get divorced, they often sell the marital residence. In 2010, divorced couples are learning there is less equity in their homes and the ability to sell a non-foreclosed or short-saled property is impacted by these market conditions. These conditions also impact refinancing as there is less equity in most properties in 2010 than existed in 2003.

A short sale is a property that is worth less than the seller owes on his mortgage, before consideration of real estate commissions and closing costs. A seller will receive no funds upon sale. Often, a seller has not only a first mortgage but also a home equity loan or line of credit to repay, which requires approval of the proposed sale by all the creditors before a closing can be set.

In foreclosure, the property is lost back to the mortgage holder for failure of the owners to make their monthly mortgage payments. Generally, a foreclosure action will commence within 120 days of failing to pay the mortgage in full. Upon taking back the property, the bank or mortgage holders will try to sell the property to recoup as much of the overdue mortgage and attorney’s fees as the market will bear.

Cash is king in today’s market, so a lower cash offer for foreclosed and short sale property will often beat out a mortgage contingency contract offer for a greater amount given certain credit restraints working in the market place. Until jobs are created which pay low six figures, real estate sales will linger and values will continue to decline because there will be too much product available for sale. All of these market issues will impact sound settlement strategies in family law for years to come. It is my goal in representing my clients to identify in the interviewing process how these issues can be managed or immediately dealt with in an earnest and open discussion

Improvoing Economy = Increase in Divorces

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A good way to tell that the economy is recovering is to review the divorce rates. In 2008, the divorce rate dropped 24% in 2008 and 57% in 2009, but started inching upwards towards the end of last year.   It appears that people were afraid they were going to lose their jobs so they were very cautious about getting a divorce because you have to split your assets.

According to figures provided by the Academy, the United States has the world’s highest divorce rate, with 4.95 divorces for every 1,000 inhabitants. The marriage rate is 9.8 for every 1,000 people, according to the US Census Bureau.

Traditionally, in an economic downturn, less people divorce and separate. Further, people also hold off on having a child. Additionally, because the cost of a divorce can be as low as $2,500 to as high as $50,000, people often think twice about divorcing.

Further, the cost of housing also affected couples’ decision to divorce. Couples also delayed their divorces because they believed housing prices would eventually rebound. Most attorneys opine that “it makes no economic sense to wait for the housing value to go up before they divorce… that would take years and years.”

How to Select a Divorce Lawyer.

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Choosing your lawyer is probably the most important decision you will make in your divorce process. So make sure you find somebody who will smooth the road ahead, not make it more rough than it already is. Here are some tips.

1.     Schedule a consultation with the attorney. First impressions are important when choosing a person who will be representing you in very personal matters. Though this initial meeting may not tell you all you need to know about a lawyer, it will tell you if you are comfortable with the person and if they appear self-assured and well-versed in the law. You can also find out how long they have been practicing and how many divorce cases they have handled.

2.   Contact the state or local bar association. Most states have online sites where you can check on attorneys, including their disciplinary records.

3.   If possible, get a divorce lawyer with lots of experience in both litigation and negotiation. He or she will be able to anticipate pitfalls that may come up in your case and avoid them. You also want a lawyer who will be completely honest with you about your case. A lawyer who tries to sell you on how much he can win for you will only set you up for disappointment, but one who lets you know the strengths and weaknesses of your case up-front will be far more trustworthy. You also should make sure that your lawyer is accessible: you should be able to reach him or her in an emergency, and he or she must answer phone calls and e-mails.

4.   Also make sure to ask prospective lawyers about their fees, their estimation of the total cost and time spent on your case, what percentage of their cases go to trial. . Ask if they’ve handled cases like yours before; if so, it’s an advantage.

Keep in mind that you’re the one who’s employing the lawyer, not the other way around. You’re the boss: it’s your final decision who will work for you, so choose carefully.