Although the real estate market has improved in many parts of the United States since the collapse several years ago, there are still many Illinois residents who have upside-down mortgages, meaning they owe more on their loans than their homes are worth.
You may be asking yourself why we would bring this issue up on a family law blog, and the answer is that the marital home can cause a major sticking point during the divorce process, especially if the couple has an upside-down mortgage.
As we discussed in an article a while back on our website, there are a few things that can be done with the marital home during a divorce.
The first option is for one of the spouses to receive the martial home as part of his or her property settlement. Of course, this option requires that one or both of the spouses can keep up with the mortgage and other costs associated with keeping the home, so it is not a very popular choice these days.
A more popular option involves the marital home being sold. The proceeds of the sale then go toward paying off the mortgage and any leftover funds are split between the spouses. Of course, this scenario is only possible if the home sells for more than the couple owes on the mortgage.
The situation that became common during the recent recession involves divorcing couples with an upside-down mortgage who cannot afford to pay the remaining balance after a sale.
Family law attorneys have had to get creative to assist clients in this situation, sometimes turning to a short sale or a loan modification in effort to sell the home for less than is owed on it or to lower the principal on the loan.
Unfortunately, there are still many people who are facing this difficult situation while going through divorce in Illiois, and it is an issue that warrants guidance from an experienced family law attorney. Luckily, there are several potential options available today that could provide relief.