HARP II: Dump Your House and Your Spouse

January 23, 2013
By ginap

The government’s HARP program, which allows underwater homeowners with Freddie Mac or Fannie Mae mortgages to refinance, offers another benefit for divorced or divorcing spouses. Here’s the deal.

Until HARP II, underwater homeowners who wanted to go their separate ways were out of luck. While divorce court judges have no problem assigning homes and mortgage payments to one spouse or another, mortgage lenders are not nearly as accommodating. Lenders are not required to alter a home loan just because the borrowers don’t wish to remain married. It makes little sense for lenders to increase their risk by letting one party off the hook, and so they almost never do this.

The traditional way out has been a refinance, in which one former spouse must qualify for the new loan on his or her own. Once the mortgage crisis hit, however, underwater exes found themselves unable to refinance and unable to …

Leave a Reply