By Gerri Elder
At first glance, it may be hard to see the connection between the collapse of the housing market in the United States and delays in the divorce process. However, in some areas of the country, home sales are so slow that couples are actually trying to stick it out by living in the same house during the divorce process.
When you consider how the effects of the housing market collapse have radiated out into so many areas of American life, it's not such a stretch to imagine how it is impacting the lives of people who are going through divorces. Homes are not selling, people are losing jobs in mass layoffs every week and now lenders have tightened up lending practices. These factors make an equitable distribution of assets during a divorce especially difficult.
Generally couples that own a home either sell the home during the divorce or one party buys out the other by refinancing the home loan and paying the spouse who leaves the home their share of the home equity. However, since the collapse of the housing market, homes cannot be readily sold, and even if they could, home prices are in a state of freefall. This means that some homeowners are actually upside down in their mortgages, owing more than their homes are now worth. This makes selling virtually impossible and refinancing out of the question. Therefore couples are stuck in their homes, often together.
Divorce lawyers are seeing this issue come up across the country, and it is affecting couples of all tax brackets. The housing market problem has had a ripple effect that created previously unseen complications in divorce court.
Many couples filing for divorce say that they are facing foreclosure if they can't sell the marital home quickly. If the homes end up in foreclosure, the couple loses any equity they had in the property; therefore many make an attempt to sell the home as fast as they can. The problem is that homes do not sell right away with the state of today's housing and credit market.
A recent report by Law.com discussed a growing trend of divorcing couples who simply do not have the option to sell their homes and are thus making the decision to keep the marital home as a joint investment during and after the divorce. The spouses then become roommates and attempt to ride out the rough housing market together yet apart. If the housing market eventually bounces back, the ex-spouses can then sell the home and split a larger profit.
This type of living arrangement may not be ideal, or even possible, for some couples, but it certainly can reduce legal fees and help resolve divorce issues faster than a protracted court battle in which no one is really sure what to do.
The housing market collapse has left plenty of people with uncertainties, most recently family court judges who are in previously uncharted territory in making decisions about how to handle real estate issues during divorce in a crushed market.