Marriage breakdown and your mortgage

One of the most common reasons for a failure to make mortgage payments is the breakdown of a marriage or common-law relationship. Marriage and relationship issues come right after job losses on the top reasons why homeowners default on their mortgage.

As foreclosure lawyers acting for lenders, we often hear from borrowers who are surprised, upset or angry to learn that the mortgage hasn’t been paid. These borrowers may have made an agreement with their spouse as part of the separation that the spouse will make the mortgage payments. That spouse then fails to live up to the bargain, leaving the other spouse and often children at risk of losing their home.

The difficult reality is that a mortgage lender is not obliged to honour an agreement made between two or more co-borrowers for responsibility for the mortgage payments. The lender is entitled to collect the payments from any or all of the original borrowers, even if the borrowers have agreed between them that one of them is going to make the payments. The only way this can be changed is if the lender agrees that one borrower can assume full responsibility for the mortgage. This would require the lender’s agreement and typically, an application to the lender so that the lender can review and be satisfied that the person taking over the mortgage has enough income to cover the mortgage payments alone without the other borrower. The lender would typically require the title to the home to be transferred into the sole name of the party who will become responsible for the mortgage.

Another request that we frequently receive as lawyers for lenders is to stop or holding legal actions that have been taken on non-payment of a mortgage while the borrowers complete their divorce or other matrimonial legal steps. It is very rare for any lender to agree to this, as unfortunately, matrimonial issues often take longer than anticipated to resolve. If separating or divorcing spouses wish to avoid foreclosure, they need to reach at least an interim agreement that will see the mortgage paid.

At Hendrix Law we are not family lawyers, and recommend that people facing marriage breakdown consult a lawyer with experience in that area. However, we recommend that your discussions include plans for how you will deal with your mortgage in both the short and long term.