Divorce Money Matters

A big thanks to Amy Kelly over at www.ParenteSource.com for asking me to contribute a guest blog post about Guidelines for a Divorced Parent in Getting Financial Aid.

I dug deep into my private teleseminar library to pull out snippets from a past teleseminar interview I did with Kevin Worthley, a CFP and fellow CDFA from Rhode Island, who has a lot of specialized knowledge on these matters. Click here to read the a condensed snippets from my interview with Kevin that shed some light on this very complex matter.

I hope my readers find the information helpful as well!

I found this post online where I had been interviewed by reporter Dawn Allcot for this article on Perk Street Financials website.  http://blog.perkstreet.com/dont-drown-in-divorce-debt/  Still very applicable and great information!

Posted by Dawn Allcot on July 27, 2010 in Family, Home, Personal Finance

Yesterday’s post was about the big financial changes couples face before marriage. But if that marriage ends in divorce, it carries a whole new set of financial implications. Guest blogger Dawn Allcot is a full-time freelance writer and editor who frequently covers personal finance and credit topics. She believes these tips are smart money advice for anyone – whether they are single, divorced, or happily married.

Divorce can be emotionally – and financially – harrowing. When you’re in the midst of one, it can seem like everything is spiraling out of control, often at the expense of your heart and your wallet. According to experts, it is possible to take control of your finances, which will play a big role as you build a new life.

1. Guard your budget like you’re guarding your heart.
Although it’s not in your best interests to keep your heart guarded forever, keeping your budget on lock-down is advisable, says Lisa C. Decker, a certified divorce financial analyst who has counseled hundreds of divorcees in and around the Metro Atlanta area, as well as around the country by phone. In addition to those divorce expenses, you are probably facing a whole new set of bills, which is why maintaining a strict budget is more important than ever if you want to take control of your finances. “If you see you’re going to be short at the end of the month, anticipate and look for solutions,” Decker suggests, including getting vocal about your situation. Some credit card companies allow you to temporarily stop payments during major life events, which can include divorce.

2. Make new plans for the future.
If you received a settlement from the divorce, seek advice to find the best investment options to improve your finances. Do you need monthly interest dividends that will help with budget, or do you need stable, long-term investments that will enable you to save for retirement? “Working with a quality financial planner to maximize and potentially protect your settlement can bring much-needed peace of mind after riding the emotional roller coaster of divorce,” Decker says.

3. Avoid “Til debt do you part.”
Now is not the time to say, “I don’t care what he/she does anymore.” Rather, to take control of finances, stay on top of the paperwork and make sure all joint accounts are severed, including bank accounts, retirement accounts, and credit cards. “If you’re still attached by joint debts, make sure you get duplicate copies of the statement, otherwise your credit will be ruined if your ex can’t or won’t pay,” Decker says.

4. Move on!
After the divorce is finalized, you can and should establish a new bank account in your own name. Many adapt a whole new way of thinking when it comes to life after divorce, including how they manage their money. Meet with a financial advisor to assess your current situation and help with budget, and consider switching banks – many online banks offer a convenient, free way to manage your money.

Breathe a sigh of relief in knowing this will all soon be behind you. With the right planning and mindset, you can be richer in every way.

I received an email today from Chrissy Neumann of Keller Williams Real Estate.  She found some interesting information on Bank of America’s website, the Washington Post and the Atlanta Business Chronicles regarding the moratorium on foreclosures.  As we all know, this is changing literally by the day, but Chrissy has done a pretty good job of assembling a Q & A here that I thought folks might find helpful.  Thanks Chrissy!

Chrissy Neumann  www.CastlesByChrissy.com

There has definitely been a lot of "late breaking news" this week and last in regards to major mortgage holders STOPPING the foreclosure process.  We have been inundated with questions and comments as to how this will effect us.   As your real estate consultant, we wanted to share with you what we know to date.  This is changing daily right now, so we will keep you informed as we learn more.

Bank of America, the nation’s largest bank, said it was halting all foreclosure sales nationwide, and industry sources said J.P. Morgan Chase, the nation’s second largest bank, will expand its freeze in 23 states to a handful of others. PNC Financial Services has stopped some foreclosure proceedings, according to an industry lobbyist and a title insurance company. A PNC spokesman, Frederick Solomon, declined to comment on whether the lender was halting foreclosures. He said the bank was reviewing its procedures.

The Obama administration rejected calls for a nationwide moratorium on housing foreclosures amid fears that such a move could cripple an already slow recovery of the U.S. housing market.

Banks are expected to take over a record 1.2 million homes this year, up from about 1 million last year, according to real estate data company RealtyTrac Inc.

Foreclosures made up nearly one in four U.S. homes sold in the second quarter.

Questions and Answers:

Does this mean that Bank of America has announced a moratorium on all foreclosures?

No, this is not moratorium.  We will continue the foreclosure process on delinquent borrowers, but will not proceed to judgment or with a foreclosure sale at this time.

What is a foreclosure sale?

After a severely delinquent customer goes through the foreclosure proceedings, their home becomes property of the investor or bank.  At that time, the home is sold at public auction. It is only after that time that a customer may be evicted from their home.

How long will Bank of America stop foreclosure sales?

We will stop all foreclosure sales until our assessment has been completed.  After that time, foreclosure sales will be rescheduled.  It is estimated that we will begin the process of rescheduling foreclosure sales on Nov. 1 or earlier.

What does this mean for customers currently in the foreclosure process?

We will continue the foreclosure process on delinquent borrowers, but will not proceed to judgment or with a foreclosure sale at this time.  Foreclosure sales scheduled for Sat., Oct. 9 or later will be stopped and rescheduled, as appropriate, at a later date.

What should customers do as a result of the announcement?

Customers do not need to take any specific action as a result of the announcement.  Foreclosure attorneys have been informed of the postponement of all foreclosure sales as of Oct. 9. We will continue to follow our existing process of informing customers who are in the foreclosure process of the status of their loan.  Should a customer have any questions, they can contact customer service at 1.800.669.6607.

Why is the bank taking this action?

Due to questions raised about the foreclosure affidavit signing process, we are taking these steps as a precaution as we review our process for handling foreclosure documents.   Our ongoing assessment shows the basis for foreclosure decisions are accurate.

Does this mean Bank of America has been wrongfully foreclosing on customers?

No. Our ongoing assessment shows the basis for foreclosure decisions are accurate.

What does this mean for Bank of America’s previous announcement about delaying foreclosures in 23 states where courts have jurisdiction over foreclosures?

We have now extended our review of foreclosure documents to all fifty states.

What is a foreclosure affidavit?

A foreclosure affidavit is a legal document filed with the Court that provides a summary of information about the foreclosure, the property and the amount that is owed on the note.  In 23 states where the courts have jurisdiction over foreclosures, an affidavit of indebtedness must be submitted before proceeding with the foreclosure.

In which of the states do the courts have jurisdiction over foreclosures?

There are 23 states: Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin.

Will listing be pulled from the REO brokers based on the announcement today?

The announcement does not impact the selling of homes that have previously gone through the foreclosure process and are currently being marketed by Bank of America as an REO property, or are currently under contract with a buyer. We are proceeding as we normally would with marketing and closing those properties. Only properties currently in a foreclosure or eviction status are affected by the announcement.

What does this mean for borrowers currently in the foreclosure process and who have been assigned a foreclosure sale date of Sat., Oct. 9 or later?

These foreclosure sales will be stopped.  Foreclosure attorneys have been informed of this stoppage and a new foreclosure sale date will be scheduled after the completion of our assessment.  It is estimated that we will begin the process of rescheduling foreclosure sales on Nov. 1 or earlier.

What does this mean for borrowers who previously went through foreclosure and had their property sold in a foreclosure sale before Sat., Oct. 9?

The foreclosure sale will stand and the process will continue as scheduled.

Will borrowers who have gone through a foreclosure sale – and are still in their home – be evicted?

Impacts to post foreclosure sale activities will be determined based on property ownership.

•             If Bank of America takes ownership of the property after foreclosure sale (REO), Bank of America will not evict the occupants.

•             If the loan is property of a third-party investor, Fannie Mae or Freddie Mac, they will take ownership of the property through their own REO process and will make a determination whether or not to evict occupants.

If a borrower has gone through foreclosure sale and their loan/property is now owned by a third-party investor or Fannie Mae or Freddie Mac, how can they determine if they will be evicted?

Eviction proceedings on properties owned by third-party investors, Fannie Mae or Freddie Mac are governed by those parties.  Borrowers or their foreclosure attorneys will be informed of those decisions.

Hopefully we were able to answer most of you questions with this email. However, if you have a question left unanswered please email us at chrissy@CastlesByChrissy.com