Mortgage after Divorce

christy02

Hi all,

Looking for a small bit of advice here as I am not sure where to go next. Appreciate if anyone could add knowledge or personal experience.
I separated from my wife 11 years ago. We were joint names on mortgage of a house. I paid the mortgage for 5 years after we separated even though she was living there. As part of separation agreement through mediation, she was taking over the payments on the mortgage which she did.
We got divorced in January of 2017 (amicable) and part of the divorce agreement was she would have sole ownership of the house and that I was not liable for any debts, or entitled to any equity from the house. This was approved by the court.
The bank then agreed to take me off the mortgage as a result.
I pay a substantial maintenance each month. This obviously helps my ex wife pay the mortgage. She has a deal with the bank to pay a lower payment and warehouse part of the debt.
I am remarried since the divorce and myself and my wife have 2 children.
We now decided we would look into buying a house ourselves. We have sufficient savings, no loans and tick the financial boxes with no issues. My wife is a stay at home parent but I earn enough to afford a mortgage, even with the maintenance payments taken into account.
Everything looked ok until the bank came back to say I was still showing on a mortgage from the house with my ex wife. My credit report is fine but this is an issue and they declined the mortgage.
The bank that my ex wife has the mortgage with say now that they have changed their mind about removing me from the mortgage.
Is there anything I can do considering that the court has stated that I have no responsibility for the house? Is it worth engaging a solicitor to look into this for me or does the bank have ability to keep me on the mortgage.
Obviously this is a worry as we cannot rent forever and would really like to buy a house in our local area. We have financial means to do so and this is the only thing stopping us. Don't know where we go to next.

Any advice much appreciated.

Cash_Q

Absolutely worth engaging a solicitor about this. If the court made their decision then you have a right to see this adhered to. Best of luck.

Peregrinus

It doesn't appear from the OP that the court, when making the financial settlement, ordered the bank to discharge the OP from the mortgage. (Indeed, I'm not sure that the court would have power to do that.) The court made its orders and the bank subsequently agreed to discharge the OP, though it seems that was never followed through. And now the bank is not so happy with the idea.

Definitely engage a solicitor.

It will help considerably if the bank signified its agreement before the court ruled on the financial settlement, and the court was told about this and made its orders in the belief that the bank would do this. The bank should be very, very embarrassed to change its mind in these circumstances. But even if the bank agreed after the court orders, I'd still press them strongly. Both parties have conducted their lives, and made their arrangements, on the basis that the bank was happy to do this.

A definite weakness, though, is the fact that despite the bank being willing to let the OP be discharged, the OP and his ex never followed through and executed and registered a discharge. Why not? Is the reason for not doing this when it should have been done in any way connected to the bank's present reluctance to allow it to be done now?

And a related question; if a discharge was never registered, was a transfer of the property to the ex's sole name registered? Because that may be something that also should have been done and, if it wasn't, it needs to be done now.

christy02

Thanks for the replies all. My ex's solicitor (legal aid) was due to follow through with the bank to do this. It was never done. I believed that it had been done.
It was not agreed by the bank until after the divorce agreement. The reason I believe they agreed is that they knew that if she defaulted, they would not be able to come after me as I would have the divorce agreement to say I have no liability, so would obviously not pay for something I had no comeback on.
I will certainly look to engage a solicitor if I felt that I had any chance of this being completed. It would be well worth the money.

Peregrinus

christy02 wrote: »

Thanks for the replies all. My ex's solicitor (legal aid) was due to follow through with the bank to do this. It was never done. I believed that it had been done.
It was not agreed by the bank until after the divorce agreement. The reason I believe they agreed is that they knew that if she defaulted, they would not be able to come after me as I would have the divorce agreement to say I have no liability, so would obviously not pay for something I had no comeback on.
I will certainly look to engage a solicitor if I felt that I had any chance of this being completed. It would be well worth the money.

The divorce agreement just settles matters as between you and your spouse; you and your spouse can't agree to reduce or abolish the rights of a third party, such as the bank. So just because you and your spouse agree that only she will be liable to the bank to repay the loan doesn't mean that the bank is bound by that.

But if they did agree to discharge you, and you and/or your ex have acted in reliance on that agreement, then you do have a good case for arguing that the bank can't welch on its agreement now. But much is going to depend on the facts and circumstances and details. It's slightly surprising to me that the bank ever agreed to release you (why would they?) so the first step in this battle may be the bank denying that they did, and suggesting that there may have been some misunderstanding.

randomrb

Do you have the Banks agreement in writing? if it was purely verbal do you have the name or position of the person you made this agreement.
If not you could be in a difficult position.

Otherwise does your ex have a new partner or someone else who will effectively swap places with you on the mortgage. Banks very often agree to this. If your divorce was amicable and you are still on good terms with your partner that may be an option

CeilingFly

How about approaching the same bank? Mortgage market is competitive and they'll work hard to get the business.

christy02

randomrb wrote:

Do you have the Banks agreement in writing? if it was purely verbal do you have the name or position of the person you made this agreement. If not you could be in a difficult position.

randomrb wrote:

Otherwise does your ex have a new partner or someone else who will effectively swap places with you on the mortgage. Banks very often agree to this. If your divorce was amicable and you are still on good terms with your partner that may be an option

I don't have any agreement in writing. Verbal only. I do have the name of the person that made the original agreement, however I am finding it difficult to get hold of them.

My ex has a new partner, but they are not together long and she is not currently willing to put him on the mortgage. This may change in future.

christy02

CeilingFly wrote:

How about approaching the same bank? Mortgage market is competitive and they'll work hard to get the business.

Thought of this and may look into it if it's best course of action. They may of course laugh me out the door!

Sassygirl1999

Peregrinus wrote: »

It doesn't appear from the OP that the court, when making the financial settlement, ordered the bank to discharge the OP from the mortgage. (Indeed, I'm not sure that the court would have power to do that.) The court made its orders and the bank subsequently agreed to discharge the OP, though it seems that was never followed through. And now the bank is not so happy with the idea.

Definitely engage a solicitor.

It will help considerably if the bank signified its agreement before the court ruled on the financial settlement, and the court was told about this and made its orders in the belief that the bank would do this. The bank should be very, very embarrassed to change its mind in these circumstances. But even if the bank agreed after the court orders, I'd still press them strongly. Both parties have conducted their lives, and made their arrangements, on the basis that the bank was happy to do this.

A definite weakness, though, is the fact that despite the bank being willing to let the OP be discharged, the OP and his ex never followed through and executed and registered a discharge. Why not? Is the reason for not doing this when it should have been done in any way connected to the bank's present reluctance to allow it to be done now?

And a related question; if a discharge was never registered, was a transfer of the property to the ex's sole name registered? Because that may be something that also should have been done and, if it wasn't, it needs to be done now.

how is a discharge registered?

Peregrinus

Sassygirl1999 wrote: »

how is a discharge registered?

In this situation, it generally happens in conjuction with the transfer of the property from joint names to one name.

A + B jointly own a house, and they bought it with a joint loan from Bank Z, secured by a mortgage over the house.

Unhappy differences arise, and A + B part company. It's agreed that B will keep the house, and take on the mortgage.

A transfer is prepared and executed, under which A + B, the registered owners, transfer the property to B alone. When that transfer is registered, B will become sole registered owner.

But, because Bank Z has a mortgage registered over the house, it won't be possible to register the transfer without the consent of Bank Z. If Bank Z is agreeable, it does two things. First, it gives written consent to the registration of the transfer of the house to B alone. This is produced to the land registry, who then register the transfer. Secondly, Bank Z issues amendments or additions to the loan documentation, to confirm that B alone is now the borrower, and A has no liablity under the loan. There are a couple of different ways the paperwork can be structured, but that's basically the effect of it.

sexmag

Peregrinus wrote: »

In this situation, it generally happens in conjuction with the transfer of the property from joint names to one name.

A + B jointly own a house, and they bought it with a joint loan from Bank Z, secured by a mortgage over the house.

Unhappy differences arise, and A + B part company. It's agreed that B will keep the house, and take on the mortgage.

A transfer is prepared and executed, under which A + B, the registered owners, transfer the property to B alone. When that transfer is registered, B will become sole registered owner.

But, because Bank Z has a mortgage registered over the house, it won't be possible to register the transfer without the consent of Bank Z. If Bank Z is agreeable, it does two things. First, it gives written consent to the registration of the transfer of the house to B alone. This is produced to the land registry, who then register the transfer. Secondly, Bank Z issues amendments or additions to the loan documentation, to confirm that B alone is now the borrower, and A has no liablity under the loan. There are a couple of different ways the paperwork can be structured, but that's basically the effect of it.

One important thing to note is bank Z will only agree if B can provide documentation and evidence they can afford the loan, essentially applying for a new loan all over again.

I'm aware of a similar situation, A+B split, B has been paying the mortgage on their own, has requested the mortgage be put into their name but as B is single and technically on paper can't afford it they won't, even though B has proof they've been paying it on their own for years the bank still see them as not being able to afford it after all expenses and checks etc are taken into account.

Is madness really and the bank teller agreed but rules are rules and if B went for this mortgage on their own they wouldn't get it but they do have it and are paying it.

Peregrinus

sexmag wrote: »

One important thing to note is bank Z will only agree if B can provide documentation and evidence they can afford the loan, essentially applying for a new loan all over again.

I'm aware of a similar situation, A+B split, B has been paying the mortgage on their own, has requested the mortgage be put into their name but as B is single and technically on paper can't afford it they won't, even though B has proof they've been paying it on their own for years the bank still see them as not being able to afford it after all expenses and checks etc are taken into account.

Is madness really and the bank teller agreed but rules are rules and if B went for this mortgage on their own they wouldn't get it but they do have it and are paying it.

Yes. But if B defaults A is still on the hook, and the bank can and will chase A. That provides the bank with a higher degree of security than they would have if only B were liable for the loan, so you can see why from their point of view removing A is not a trivial matter.