My client's property settlement agreement provides that the mortgage remain in place and that the house will not get sold until the children graduate high school in three years; do you still recommend seeking counsel of a mortgage planner to review the situation?
Yes because the issue that often pops up here is we will find out that the mortgage is up for an adjustment before the triggering event for the sale takes place. In most instances people do not know what type of mortgage they have let alone the financial impact it makes. By having a mortgage planner review the copy of the note and mortgage in advance of settlement negotiations you can ensure that the mortgage financing will not dramatically change mid-course.
Often times the client is mistaken about what type of mortgage they have and as a result your Case Information Statement (CIS) will not be accurate. Many times clients think that they have a 30-year fixed when in fact it is a balloon mortgage or an adjustable. Many attorneys will rely on the CIS or even the tax returns but they can both reflect things (through no fault of you or the client) that are in fact not accurate.
The best way to ensure the client has what they "think" they have regarding their mortgage is to have them provide you with a copy of their Note and Mortgage. If you are not familiar with how to read these you can send them to your mortgage planner for an analysis but basically paragraphs 2, 3 and 4 of their note will detail what they have. Highlight the terms and ensure they match the CIS.
Recently we were working on a case with an attorney and her client thought she had a regular adjustable rate mortgage as she indicated on the CIS. We obtained a copy of the note and mortgage and it turned out that it was a private note from the father-in-law which was a 3 year balloon at a rate of only 3%. She was going to remain in the home and figured that her soon to be ex-father-in-law would simply extend the note. He did not want to and we discovered that she could not afford to remain in the house. This of course changed the settlement strategy.
This example is clearly an easy one to drill down on but not all examples are clear cut. The important thing is to "know" the financial impact to your client before you begin settlement discussions. Life as an attorney is complicated enough. Why not make it easier and form a relationship with a mortgage planner to help you do a better job for your client while making it easier on you.
About the author: Dave Muti, JD, RMA is the author of Mortgages - What You Need to Know The book contains strategies to take control of your financial future is offering answers to mortgage questions and mortgage advice to today's hot real estate topics. Dave is a consultant to divorce lawyers on subjects related to divorce and mortgage and a senior mortgage planner located in New Jersey.
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