The Crucial Mortgage Steps Everyone Overlooks During Divorce

Rachael Tresch [00:00:16]:
Hey, everybody. Welcome back to Lending Leadership. We are talking today with a good friend of mine and coworker, Amy Malamut, about divorce, mortgages, and maybe some missteps, things that you don't always think about. I think everyone knows someone who's gone through a divorce. Maybe you're going through one yourself. Maybe you're a realtor or attorney who you're helping clients through this stressful time in life, and you want to be a resource. So this is an episode you are going to want to tune in to. Amy has a really unique perspective that I would venture to say probably only actually, maybe less than 1% of mortgage loan officers have the skill set of being a divorce attorney.

Rachael Tresch [00:00:57]:
Amy was a divorce attorney for over ten years, has that unique background, and then she's also a mortgage loan officer one with one of the top teams in New Jersey at HMA Mortgage. So, Amy, thank you so much for joining me today.

Amy Malamut [00:01:10]:
Thank you so much for having me, Rachel. I'm excited to be here.

Rachael Tresch [00:01:14]:
So alright. I wanna dive into maybe one of the the first things that really get overlooked is that the mortgage normally comes last when someone's going through a divorce process. It's like, oh, yeah. What are we gonna do with the house? Is just give me some perspective on that because I I would have thought that. I've never been through a divorce. Sure.

Amy Malamut [00:01:35]:
Sure. And it's crazy because it's, like, one of the biggest assets that most people have is the marital residence, or any other properties they may have that may be at issue. And it's like, it's so important, and it's usually being left till the very end of a divorce or after. And a lot of times, people are putting just very boilerplate language into their property settlement agreements or judges putting very boilerplate language into the final judgment of divorce if it goes to court all the way and the judge is making the decisions. And it's really a shame because just like divorce, how it's very fact sensitive, mortgages are very fact sensitive. And if you're not taking care and and giving and and really taking your time to look at the circumstances of each case, you really could be doing a disservice to yourself if you're the litigant or your clients if you're an attorney or a realtor. So, and some of that boilerplate language, just as an example, would be putting in an agreement that the person who wants to keep them out of residence has sixty to ninety days to buy out their spouse and, get title in their name, and then the house is is theirs. Oftentimes, sixty to ninety days is not enough.

Amy Malamut [00:02:53]:
Quick tip is that, if you're getting a conventional loan, we need to see six months of a consistent payment of alimony, under a court order if you need that alimony to count as your income. So if you're the one receiving alimony, you're the one keeping the house, sixty to ninety days is not enough time. And now you're either going back to the attorneys to try to renegotiate, or you might have a former spouse who's saying, too bad. Can't do it in ninety days, then you need to list the house for sale. And, wow, that's so devastating if you really wanna keep the house, especially if there's children involved or if the house was the main issue in the divorce and you really just wanted to keep it. So really speaking to someone like me, during the divorce is just so important.

Rachael Tresch [00:03:47]:
So that that language seems like it sets people up I mean, not intentionally. I think it's just they just don't know. But that language almost sets people up for failure from the beginning if they they seem to have a date, but you need six months of income verification of some kind. I mean, that's a really that's a really tough position to be in.

Amy Malamut [00:04:07]:
Yeah. And I will say just because, you know, it's it's certainly worth mentioning because of interest rates are relatively high right now compared to where they were during COVID. So people don't wanna get rid of their, low interest rate by refinancing at a higher rate. So I will say that there are some times that people are getting more time to refinance in light of that. But even then, people still aren't talking to us until they're at, you know, two months left on their, timeline to refinance. So time is really of the essence. Why not take care of this as soon as possible? And even if you wanna buy a house after a divorce, start talking to somebody, during the divorce process as early on as possible. These things are very time sensitive when you time a refinance, when you time a purchase.

Rachael Tresch [00:04:57]:
So I'm sure you've been on both sides of the equation where someone has come to you early, has

Amy Malamut [00:05:01]:
Yeah.

Rachael Tresch [00:05:01]:
Kind of gone through the checklist, done the right things. And then on the flip side, where where you get something and Sure. And it at the tail end and there's not much you can do, can you provide you know, I'd love to hear examples of both and how they work out.

Amy Malamut [00:05:14]:
A a good example of someone doing the right thing is, they came to me. They're probably several months out from actually obtaining their divorce. And, the it was the husband who wants to keep the house. And he makes a decent income, but his credit was not so great. So, we are working with him to improve his credit. And, also, he it would be much easier for him to also have a cosigner. So he's gonna have his parents cosign. And and this is great because now he's got months to, get make sure he got his parents on board, to follow the steps that we have provided him to get his credit where it needs to be, and he should be in a great position to be able to refinance by his soon to be ex wife out of the her share of equity in the marital residence, and he'll be good to go.

Amy Malamut [00:06:08]:
If he had come to us at the eleventh hour, I might be telling you a different story. So that's a good example of, like and these are just simple things that you can do and talk to us. Another thing is, you know, sometimes people fight about a house for two years. Who's gonna keep it? And perhaps if they just talk to us, we might be able to tell them, I don't think anyone's gonna be able to keep the house, like, under any circumstance. Or maybe only if they got a cosigner and they're like, we don't have anyone that's gonna cosign. Like, we could have cut out that acrimony at at the beginning and just said, you know what? It looks like this house is gonna have to be sold, and you're gonna have to either rent or buy something smaller or whatever the case may be, but that could happen too. And you just you just won't know it, unless you talk to me and my team.

Rachael Tresch [00:06:59]:
Well and that's that's gotta be so tough because in the meantime, they're accruing all of these these lawyer fees

Amy Malamut [00:07:04]:
Absolutely. For over a year or maybe longer

Rachael Tresch [00:07:08]:
in your experience, and that stinks only to not come to the conclusion that they were hoping for.

Amy Malamut [00:07:13]:
Right. Yeah. And they could've just stopped, you know, some of the acrimony during the divorce in the beginning. So that's another positive of speaking to a mortgage professional ASAP.

Rachael Tresch [00:07:26]:
Yeah. And and I wanna back up on something that you you just said and touched on with, credit not being so great. I think this this applies to really anyone too, but, definitely somebody who is in this kind of a situation where people don't realize credit is something that can be if there's a plan in place, it can be turned around relatively quickly depending on the situation you're in. I'm sure. Yeah. But talk to me about that a little bit.

Amy Malamut [00:07:51]:
Well, I think also during a divorce, I mean, not to mention, like, the emotional toll it takes on you that some things may bills may go unpaid. You know, whether intentional or unintentional, these are the types of things that happen. So we do find that when people are going through a divorce, that is a that is a major milestone in life where your credit may slip. You may have a spouse who used to pay the credit card bills that just stops paying the credit card bills. I mean, I can't tell you how many times that would happen when I was an attorney, and that's that's the I would say probably the most common cause of someone's credit tanking is, going late on credit cards, not paying them, running up balances super duper high. So these are things to watch out for that, like, you know, wife may not be thinking about that the her credit is going down, down, down because husband is doing something nefarious behind the scenes. It also might be not nefarious, but either way, that's something you should really start monitoring during a divorce. Also, someone may just have not checked their credit report in, you know, decades.

Amy Malamut [00:08:59]:
They just might not know. Don't wait until after the divorce to find out. Do it now.

Rachael Tresch [00:09:05]:
Yeah. I'm sure the the credit reporting agencies, they they don't really care, unfortunately, if

Amy Malamut [00:09:11]:
Yes.

Rachael Tresch [00:09:11]:
You know, you call up and say, hey. This is the situation. I mean Sure.

Amy Malamut [00:09:15]:
And that's something really important. Like, family court is a court of equity. They try to do the right thing. So a family court judge may be able to hold a party responsible for, you know, credit card debt, and things like that. But just like you said, the credit bureaus don't care. They don't care. Yeah. So, in in unpaid mortgage, they'd a judge might say husband has to bring the mortgage current, but a judge can't order a credit bureau to fix somebody's credit because of the unpaid mortgage.

Amy Malamut [00:09:54]:
So Yeah. I I think that a lot of litigants don't understand the difference. Those are two totally separate entities that exist separate and apart from each other. So, it's so super important to look out for that. It's also why refinancing is so important too. The longer you stay on a mortgage with somebody who's supposed to be paying it, the more risk you run that it might affect your credit if they don't pay it. Yeah. These are all really good points.

Amy Malamut [00:10:23]:
And and, absolutely, to just I'm sure a very emotional situation to go through, and you're not really thinking about all of these nuances. But to be an advocate for yourself,

Rachael Tresch [00:10:34]:
if you maybe you haven't had the need to have your credit checked in a very long time. But really important to have that in in the forefront of your mind of, okay. These are the things I need to get to get in in line here. You know, I wanna I wanna dive into the you know, I don't wanna throw our banks under the bus. That's not that's not the purpose of this. But a lot of time, people I'm sure will say, oh, well, you know, my bank that I've been dealing with with a number of years, you know, I have a prequalification from them, so I'm good. Sure.

Amy Malamut [00:11:03]:
Can can you just talk a little bit to that aspect? Because Sure. I think that's something a

Rachael Tresch [00:11:07]:
lot of people fall into.

Amy Malamut [00:11:09]:
We actually had someone reach out to us and said they got a prequalification from their bank, and they were actually under contract to buy a house. And this was somebody going through a divorce, and they wanted to move out and buy a house. And and they were actually had a closing date. And but they didn't have a actual mortgage preapproval, which is really a step after the prequalification and requires us to look at all your documents and things like that. So, when we, talked to this person further, we learned that they hadn't even started receiving alimony and child support yet, which was going to be integral for this person to qualify for a mortgage. So it's like they basically got this prequalification maybe just typing in some numbers on a website, but it really they were never gonna be able to obtain a mortgage. Now if, again, if they had talked to us months in advance, we may be able to, talk to their attorney, say you need to get an order in place because and I don't wanna get too complicated with this, but we can count orders, which are, it means pending the litigation in in Latin. So if they had had an order about alimony and child support already, we may have been able to actually get them to that point, but they didn't have one.

Amy Malamut [00:12:30]:
So, you know, you don't wanna also fall into the trap of these, like, let's call it bad prequels. You have to actually talk to someone like me and get a real mortgage preapproval. And you know if you got a preapproval that we looked at your documents, that we ran your credit, that we looked at your divorce agreement. So those are all the things that are are super important to do.

Rachael Tresch [00:12:53]:
I love that your your lawyer is showing name. You know? Right. Like that but that's really important especially with the mortgage loan officer dealing with attorneys that you speak their language. You know? For sure. There are there are ways that I would have phrase that. I I would never have used those.

Amy Malamut [00:13:07]:
Yeah. We've well, as we call it temporary a temporary order or we now our PL order, pendente, late day order, it's all the same. It's a type of order that exists before the final order in a divorce.

Rachael Tresch [00:13:19]:
In your experience, how how important has that been when when attorneys realize, wow. Okay. You were an attorney. You speak our language. We can we can speak freely like this or, I mean, that has to really Sure. Their position and make their jobs a lot.

Amy Malamut [00:13:36]:
Yeah. I I I think that I think especially when it comes to figuring out where people are at in the divorce process itself, speaking the language is important. You know, I'm not just saying, like, when are you getting divorced? It's like, well, have you been to like, in New Jersey, there's something called the early settlement panel. That's usually a pretty good indicator that we're getting closer and closer to getting a real trial date. Have you been to the early settlement panel yet? Have you, gone to a mediator? If so, who was your mediator? I might know how good they are. Are there any orders? Are there any issues that have already been settled? Did you already settle custody? Did you already settle child support? Did you already settle who's gonna get the house? What are the issues that are out there? So there's just certain questions that I kinda know to ask to get an idea of, I mean, are we two and a half months two and a half years away, or are we, like, weeks away? And that's very important for our job is to know where you're at in the process.

Rachael Tresch [00:14:41]:
Yeah. That's that's so important. I mean, honestly, you don't know what you don't know. So it's not a realtor's fault or an attorney's fault, because they're staying in their lane and this these are the things and they're they're working within their wheelhouse. But when you've been on both sides of the fence, I mean, I imagine that you just add such a wealth of information and Yeah. Have helped people through probably navigating some landmines, some further landmines. No one needs more more mess when going through it.

Amy Malamut [00:15:09]:
And I know I know more than anyone how busy lawyers are. They're it sometimes you can only put out the fire that's right in front of you because that's how busy you are. So when it comes to something like a house, just have your client pick up the phone and call me, and I will tell you where we're going with this. You know? You don't have to be an expert on everything, and nobody is. So really using someone like me, just like you would use a forensic accountant if there is a business to be evaluated and and divided between the parties. We can be a similar type of tool.

Rachael Tresch [00:15:51]:
That's a really great analogy. I love that you said that. And, you know, obviously, we don't wanna take away from our other mortgage professionals out there. But, again, the same thing if you don't know what you don't know. So, you know, everyone, as you're listening to this, and we all know someone who's gone through this situation, who will go through this situation, just remember Amy and her team because they really do hold a unique set of of qualifications that I I'd be curious to know how many other people there are in your position, Amy. I feel like

Amy Malamut [00:16:20]:
Right.

Rachael Tresch [00:16:20]:
It is such a unique skill set.

Amy Malamut [00:16:23]:
You

Rachael Tresch [00:16:23]:
know, I wanna flip the script a little bit and focus on maybe things that the realtors should be asking. Should they be asking a different set of questions than, than the attorneys? I imagine for in the most case, in this kind of a situation, divorce situation, people are probably meeting with their attorney first, then the realtor, and then the mortgage professional last. We need to flip that completely. But what are some things that that maybe the realtor

Amy Malamut [00:16:49]:
should There's definitely some I I would say there's a set of questions that are a little unique to a divorce, situation, you know, rather not just like, what's your name, date of birth, social you know, There's other questions. Like, one we kind of talked about already, like, where are we in the divorce process? Because that's very important. Especially for a realtor, you don't wanna start showing people houses if they don't have the money they need to buy the house yet. You know? Yeah. There's there's almost no point. We know how how quickly houses, you know, fly off the shelves nowadays. So really seeing where they're at in the process is very important. You know, obviously, asking what child support and alimony is or what they anticipate it's going to be.

Amy Malamut [00:17:33]:
It's also very important to understand how long the alimony and child support is going to be paid for. There's very specific rules in the mortgage world. Like, for example, any child support and alimony has to be received for at least three years after the date of closing on a loan. So if you're only getting two years of alimony, we can't count it. This also goes for if you've already gone through a divorce and you wanna refi or buy a house. I need to know is that alimony ending anytime soon. So that's enough so how much longer is your alimony going to be received? It also may affect the person paying the support too, not just receive. Are you paying alimony? Are you paying child support? How much longer are you paying that for? Credit, very important, especially for someone going through a divorce.

Amy Malamut [00:18:20]:
What is your credit like? If you have a feeling that it's not great, please talk to somebody as soon as possible to to get it where it needs to be. Another thing is what's your job situation like? Much like credit, jobs change a lot during a divorce. You might have someone who is a stay at home parent who's going back to work or someone who is a part time worker going back to work full time. It's very important to us to know how long have they been at this job, or are they going to be switching soon from part time to full time? And there's very fact specific, questions that we have to ask in order to be able to count as much income as we can so that they can qualify for a a mortgage. And the last thing I I would I would ask is, do you think there may be some sort of a lien against your house? Uh-huh. You do not want to go through the whole refinance process only for the title company to find some sort of lien that you may be responsible for, and you already agreed that you're gonna be the one to refinance, the divorce is already done, this you'll be responsible for paying that if you wanna complete the refinance. So that's cert certainly something that, you know, a litigant should be thinking about, an attorney should be thinking about, a realtor should be thinking about, during a divorce so that, we can have a title company maybe run a a lien and judgment search and find out before you agree to x y z whether there is something there, especially if you think you may have been married to some sort of a bad actor who may have some, you know, unpaid debts, unpaid child support, things like that that have now become a judgment against the house. So I'd say those are, like, five questions that are very specific to a divorce circumstance.

Amy Malamut [00:20:12]:
Now

Rachael Tresch [00:20:12]:
do you find that the realtors that you deal with, are these questions that might put them in an uncomfortable situation? Do they do they oftentimes just maybe they're not asking those questions, or or do they just refer to you in in that Right.

Amy Malamut [00:20:27]:
I I think a lot of them are asking the questions, but maybe not getting as specific. So I would say if they're uncomfortable, have them talk to me because anytime I talk to anyone and I say, listen. I was a divorce attorney too. It kind of makes them feel better and say, oh, okay. I can tell you all these things. I can divulge this. It's almost like talking to a therapist. I think I think divorce attorneys should automatically get some sort of therapy license.

Amy Malamut [00:20:53]:
Sorry to any therapists out there. But it it lets their guard down, and it tells them, like, oh, I can talk to Amy about these things. So just defer to me about them, and I I will talk to to them about any sensitive topics.

Rachael Tresch [00:21:07]:
Yeah. Because a lot of times, I I would imagine, you know, for realtors, it's it's a friend of the family. It's, you know, a friend of a friend, someone you're close with, and and that might be just a little bit I don't know. Sure. The whole thing's touchy. The whole thing is very exposing. And so, you know, to deal with someone who is a professional who knows the right way to ask certain things, that doesn't feel uncomfortable, you know, asking hard questions, that's they're needed, they're important, and, you know, takes takes the pressure off the realtor Sure. I would imagine.

Amy Malamut [00:21:38]:
Yeah. And nobody, you know, nobody wants to feel like they're offending anybody by asking certain questions. And I I would like to think I ask these questions in a way that people feel like, no. Amy's asking them because she has to, because she's trying to help me and get to the bottom of something rather than, you know, like, it insulting me by asking certain questions.

Rachael Tresch [00:21:59]:
This is all great information, Amy. I mean, I know this is gonna touch someone out there. And, again, if you know someone going through this situation, unfortunately, you know, I think we all do. Please share this. We'll have Amy's contact information linked to the podcast so you can connect with her directly. But, in closing, is there any any last bit of information or, you know, anything you'd like people to to have as a last Absolutely. I'll

Amy Malamut [00:22:25]:
I'll say two things. Number one, going through a divorce is tough and stressful and hard. The marital residence or any properties you own are usually a huge part of a divorce. Don't make this already not such a great situation even worse by not talking to me as early as possible. You're you're just causing more stress by doing that. So talk to a mortgage professional as soon as possible. Number two, you all know you can't go look at a house without a mortgage preapproval. You should not be able to represent that you can keep a house or tell someone that they should keep a house without a mortgage preapproval.

Amy Malamut [00:23:07]:
So get the mortgage preapproval during the divorce. It will just help everybody out. We'll streamline the divorce process and make it less stressful for everybody.

Rachael Tresch [00:23:17]:
That's great, Amy. Thank you. Yeah. Everyone, don't wait until the ink is dry. And if you were listening to this podcast and need to send it to a friend, please do. We will, we will connect Amy's information down below. And, again, if you're not connected with her on social and, we'll have her website, please make sure that you connect with her. Thanks for your time, Amy.

Rachael Tresch [00:23:37]:
I think this is Thank

Amy Malamut [00:23:37]:
you so much. That this is very fun. Thank you. I hope that we can help just some people out there going through a tough situation.

Rachael Tresch [00:23:46]:
Absolutely. Alright, everybody. We'll catch you next time. Thanks, Amy. Thank you. Bye. Bye.