In a complete turnaround from anything most of us have experienced, divorcing couples are now fighting about who should get the house rather than who should keep it.
With negative equities and the amount of mortgages that are underwater, some people may even be waiting out the recession in order to go through with the divorce.
In a divorce, the person who keeps the house is usually required to refinance the mortgage in order to relieve the other party of the responsibility. The problem is that right now, refinancing is almost impossible due to the fact that real estate has lost so much value and there are so many mortgages that are higher than the value of the house.
A divorcing couple may opt to try to sell the house but even at that they are struggling because they either can?t sell it for what they owe or a buyer cannot find the financing to pay the price, especially if the appraisal comes in short (which is an extremely common scenario as appraisers tend to be on the conservative side so as to cover their own @$$).
Another option would be to do a short sale on the home where the bank ends up taking less for the house than is owed, however, that will affect both parties credit in a negative manner and both will end up with bad credit for the duration of at least 7 years so many people may not want to take that option.
In 2009 the divorce rate in the United States dropped 4%. In the year 2007 the divorce rate rose 7%.
So are married couples just putting aside their differences and deciding that they are really in love and want to live happily ever after, after all? Or is it just not as financially feasible for either party to split up because of the drop in home values?
See Divorce: Legal Issues when you sell the house for further information.