Q: Is my wife responsible for the foreclosure of her ex-husbands house if she waived all housing rights when she divorced.
The reason for the question is that he passed away before the foreclosure. As I said, she waived all housing rights in the divorce agreement, but it seems as though she'll have a "foreclosure" on her record if we don't sort this out. My understanding is if she's susceptible to a credit hit like that, then she should be entitled to the house. Any insight would be appreciated. This is in the state of VA if that helps.
A:
If the mortgage loan and title to real property in Virginia is joint, then both spouses have rights and liabilities. If one spouse will receive the real property incident to a divorce, that spouse should be required to sell or refinance the property in order to remove the other spouse from his or her liability for the mortgage loan. If one spouse transfers the real property to the other without a provision for a sale or refinance, then the transferor spouse remains liable to the lender. Lenders are not affected by what the spouses may provide in a separation agreement, or even in a divorce decree, as the lender is not a party to the proceeding.
If the property is subsequently sold at a foreclosure auction because of a default, the noteholder can sue either spouse for the full amount of any deficiency in satisfaction of the promissory note that was secured by the deed of trust on the real property.
Anyone facing foreclosure in Virginia should consult with an experienced Virginia creditor-debtor lawyer.
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