By Monica Hatcher
RISMEDIA, Dec. 8, 2008-(MCT)-During the real-estate boom, couples who divorced would fight over who got the house, betting that the winner could get rich from rapidly escalating prices. Spouses plunked down thousands to buy out their partner. Disposing of the “marital asset” was easy, since homes were selling in a day or two for inflated prices.Now, in a twist on the classic divorce dispute, houses have become hot potatoes for couples divorcing during the downturn.
‘It’s like, ‘You take the house!’ ‘No, You take the house.’ ‘I don’t want it, you take it,'” said Drew Sheridan, a veteran divorce lawyer in Kendall, Fla.
Falling property values have turned many homeowners upside-down on their mortgages, meaning they owe more than their homes are worth. Negative home equity has made it much harder for divorcing couples to disentangle their finances.
In some cases, they are abandoning their property to foreclosure because neither can afford the loan payments and they can’t sell the house for what they paid for it.
Or they are still living together as platonic “roommates,” confusing distraught children and keeping everyone from healing and moving on.
“It has become an epidemic. We have a really, really serious problem,” said Elinor Robin, a family and divorce mediator in Boca Raton, Fla.
Many family lawyers have had one or more cases in which clients were wrangling over homes that have become a financial millstone.
“Instead of an asset where they used to fight for occupancy, possession and ownership, they’re now fighting to abandon their personal interest,” said William Koreman, a divorce lawyer in Hollywood, Fla. “Neither of them wants the property because they would be accepting a huge liability.”
In extreme cases, a homeowner has used the mortgage as a weapon of spite, deliberately sabotaging his or her own credit to destroy the credit of the former partner, said Adam Franzen, a Fort Lauderdale, Fla., family lawyer.
Even when couples try to play nice, their disintegrating financial condition turns an amicable split into a war of the roses.
After her divorce in May, Jean Kouch took sole responsibility for paying the note on an investment property that she and her former husband had bought several years ago in Pembroke Pines, Fla. Kouch moved into the house with their 10-year-old son.
Even when she was working, she struggled to cover the $3,500 monthly payment. After she was laid off by Miami-Dade County in August, it was impossible to keep up. The house went into foreclosure last month-and her ex’s name is still on the loan.
The relationship went radioactive.
“He’s angry now, and I know this is a part of it,” Kouch said. It’s hard to feel guilty, she said, especially since she advised him not to buy a second home in the first place.
For couples going through a toxic split-up, a dent in the credit score is sometimes the least of their concerns.
“When people want to get a divorce, they really want to get a divorce. They don’t really care about the money,” said Scott Ferris, a Pinecrest, Fla., divorce lawyer.
A Broward County (Fla.) Circuit Court general magistrate approved a joint ownership arrangement in which the husband remained a co-signer on the mortgage while his ex-wife and their 4-year-old daughter lived in the house.
The plan was to sell the home when the market recovered.
But because he was paying half the mortgage, the husband felt that he could drop in whenever he wanted-without knocking-to raid the fridge, do his laundry and watch TV.
The wife wasn’t too happy with that arrangement.
“When people are stuck in a house, so much gets put on hold,” said Robin, the Boca Raton mediator. “They are living in limbo. They are not really free to date other people.”
Fed up with the unexpected company, the wife finally agreed to sign over the house to the husband. He’ll make the monthly payments, but she remains on the mortgage-a worrisome thing, since she’s not sure that he can cover the $2,000 a month.
“Peace of mind is a lot more important than a piece of land,” said Danielle, 33, the wife, who asked that her last name not be published to avoid jeopardizing the arrangement.
“If it goes into foreclosure … you have to live and move on. I don’t think anybody is concerned about their credit anymore. Everyone’s credit is shot.”
Couples all over are facing similar choices.
“People are taking a hit financially as opposed to holding their noses and staying married,” said Ferris. “I’d say one out of 10 can stay together long enough to survive the bad real-estate market.”
In the past, the spouse keeping the home would refinance the loan under his or her name. But if your home is worth less than your mortgage balance, you can’t refinance without coming up with a load of cash.
Consequently, lenders have a big stake in marital harmony.
“It benefits the lender to have more people obligated to the loan,” said Ghenete Wright Muir, Danielle’s divorce lawyer. “They aren’t going to allow someone to be taken off.”
When Kellie and Ken Kuecha decided to untie the knot, they opted to live together-but separately-under the same roof until the market recovers.
Kellie Kuecha said they have separate bedrooms in the Boca Raton home and are dating other people.
The arrangement has worked because their children are young and the couple decided to devote themselves to personal growth, which has helped them live together as best friends, said Kellie Kuecha, whose business offers “success coaching” and personal development for women.
“We bought our home as an investment,” she said. “And that is still our intention. If we sold right now, it would be like selling stock short.” She added that after several renovation projects, there was little equity in the property.
“Everything we have financially is in this house,” said Ken Kuecha. “So, we really do not have a choice to let it go now.”
That kind of long-term thinking is the key to getting through a marital breakup without destroying your finances, said Koreman, the Hollywood divorce lawyer.
Duking it out in court may only lead to bloated legal fees, further emotional distress, and-if the market tanks even further-additional reductions in the value of the home.
“They would just be throwing good money after bad,” Koreman said. “At that point, there won’t be a house to fight over.”
© 2008, The Miami Herald.
Distributed by McClatchy-Tribune Information Services.
