Do’s and Don’t’s For Divorce Attorneys (and Their Clients Owning Real Estate)

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As a mortgage loan officer, I typically work with home buyers who are moving up, buying their first house, or buying a vacation or investment house.  My refinances are often rate and term – (lowering the client’s payment) or cash-out for a specific purpose like paying down credit card debt. 

Working with separating and divorcing clients is a particular area of my expertise.  One or both parties often need to buy a new home, sell their current home, or refinance their partner off the mortgage if retaining their home.  Rules regarding divorce or separation status vary from state to state, including community property state specific laws.  Working with a knowledgeable attorney and lender will help you and your client move forward in their lives.  Because I specialize in assisting Virginia divorce attorneys, a few of the following suggestions may not apply if you're in another state.  That said, most are universal because of their role in the mortgage underwriting process.

Do: Involve me early on in the process for any clients wishing to sell their house, buying out their soon-to-be-ex spouse or buying a different home. I will give you guidelines specific to your client’s situation.
Don't: Bring me in once the Property Settlement Statement (PSA) is finalized, when I can’t suggest constructive modifications.
Do: Invite me into your Collaborative process, if that is one of your areas of practice. I can hear each of the spouses needs in order to help you advise them. (I also don’t charge for that time!)
Don't: Keep me out the loop with regards to timing, spousal support or child support amounts and time duration.
Do: Ask me how long child support or spousal support needs to be received before a client can close.
Don't: Assume that guidelines are static and identical for all loan programs.
Do: Ask me how long child support or spousal support needs to continue in order to qualify as effective income.
Don't: Establish child or spousal support to end exactly on the month needed to qualify.
Do: Share your Brandenburg Formula with me, as “cash out” to one spouse isn’t necessarily “cash out” to the lender. This critical distinction may benefit your client dramatically.
Don't: Assume I’m clueless about Brandenburg or PSAs.
Do: Let opposing counsel know that I am involved. In many instances I’ve worked with him or her before.
Don't: Assume that you can’t sit in on a conversation with your client in my or your office. All we need is your client’s permission, and you’re welcome to attend.
Do: Ask me to get a baseline credit report for your client, which ensures we’ll have accurate scores and debt load.
Don't: Assume either party will faithfully pay all bills on time and avoid power struggles/delinquent payments, impacting both their credit histories and mortgage options.
Do: Ask me about lump sum payments vs. monthly support payments and how they benefit or hurt your client before completing the PSA.
Don't: Assume that voluntary, consistent monthly spousal or child support payments prior to PSA can’t be used towards minimum timeframe required by lenders.
Do: Let me know at the outset that your firm would like to handle the sale, purchase and/or refinance. We would like the client to have one contact firm, if possible.
Don't: Worry if your firm doesn’t have a real estate department, we’ll gladly recommend a competent attorney to represent him or her in their transaction.