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Current Nevada Law: Subject to Verification
A divorce determines rights and obligations between the parties according to the legal process; the mortgage lender has its own contractual relationship with the borrower or borrowers. Those are separate relationships. Whether a borrower can be released, refinanced or otherwise addressed is a lender question, and any transfer of ownership involves title/escrow professionals and legal counsel.
One of the most dangerous misunderstandings in divorce real estate is assuming that because the divorce says one person gets the house, the other person automatically disappears from the mortgage.
That is not how a mortgage contract should be assumed to work.
The divorce determines rights and obligations between the parties according to the legal process.
The mortgage lender has its own contractual relationship with the borrower or borrowers.
Those are separate relationships.
Example: both spouses signed the mortgage
Imagine Husband and Wife both signed the mortgage.
The divorce ultimately provides that Wife will keep the house.
Husband transfers whatever ownership interest the legal process requires.
That does not necessarily mean the lender has released Husband from the debt.
Title and financing are different
This is why the distinction between title and financing matters.
The deed relates to ownership.
The mortgage/deed of trust and promissory note relate to financing and security for the debt.
Changing one does not automatically change the other.
What about refinancing?
One common way a spouse keeping a property may address a joint mortgage is through refinancing, assuming the borrower qualifies and refinancing is appropriate.
But don't wait until after the divorce is complete to discover whether the proposed financing works.
Talk with a qualified lender while the housing options are being evaluated.
If the existing mortgage has a particularly attractive interest rate, ask the lender or loan servicer whether any loan-specific options exist. Do not assume they do, but do not make a major decision without asking either.
Why the departing spouse cares
Why does the departing spouse care?
Because remaining connected to a mortgage can potentially affect future borrowing and credit.
If the spouse who keeps the house later stops paying, the private agreement between former spouses does not necessarily erase the lender's contractual rights.
The correct team
This is one of those areas where the correct team matters.
- Your attorney addresses the divorce.
- The lender addresses financing.
- Title/escrow professionals address their portion of the property transfer.
- Lisa helps you understand the market value and what selling could look like if keeping the existing house is not financially workable.
Related Reading
Important
The deed and the loan do different jobs. For the ownership side, see I'm on the Deed but Not the Mortgage, and for the financing side, talk with your lender. Lisa handles market value and what selling could look like.
