Divorce Rich with Jacki Roessler, CDFA

Divorce and the Mortgage: Can One Spouse Keep the Low Rate? With Brian Mutter, CDLP

• Jacqueline Roessler, CDFA • Season 2 • Episode 14

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Think you can simply “assume” the mortgage and keep that sweet 3% rate? We pull back the curtain on what actually happens when one spouse tries to take over the home loan after divorce—and why lenders often say “maybe” on the phone but “no” in underwriting. With guest Brian Mutter, a Certified Divorce Lending Professional, we unpack how assumptions work, when they collapse under lender-specific rules, and what to do when you still need to pull equity to buy out your spouse.

Throughout, we show why involving a CDLP before your judgment is final protects you from unfinanceable settlements. Align legal decisions with lending rules, document the right income at the right time, and avoid assumptions that unravel after the ink dries. Plus, in our mailbag, we explain how to access an ex-spouse’s 401(k) using a QDRO, timelines to expect, and why a specialist is worth the fee.

If this helped clarify your housing plan, follow the show, share it with a friend who needs it, and leave a review with your biggest mortgage question—we might feature it next.

  • To contact Brian at Go Forward Mortgage, email at brian@goforwardmortgage.com or call 248-956-0445
  • To schedule an intro call with Jacki to see if she's a good fit for your divorce, click this link https://calendly.com/roessler-jacki/30min
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Visit us at https://www.roesslerdivorce.com/ to learn more about Jacki's practice and to find valuable resources for your case.

The Divorce Rich podcast is proudly sponsored by Center for Financial Planning: Striving to Improve Lives through Financial Planning Done Right! https://www.centerfinplan.com/

SPEAKER_03:

Welcome to the Divorce Rich Podcast. I'm your host, Jackie Ressler. I've been a certified divorce financial analyst for 28 years, helping clients and their attorneys navigate the often complex and confusing financial issues in divorce. If you're in the process of or considering divorce, now is the time for you to take a deep breath and give yourself permission to find clarity on the financial issues you're facing. Rich means many things to many people. I believe the best definition of being rich is someone who has access to many resources. Along with my guests on this podcast, I will be bringing you a wide variety of information so that you can make sound and informed financial decisions for your financial future. And let's be honest, the financial part, it's overwhelming, confusing, and often the last thing you want to deal with. That's why I want to tell you about the independent wealth management team at Center for Financial Planning. Their team of certified financial planners specializes in helping people just like you navigate life changes with confidence, whether it's assessing your new financial circumstances, creating or updating your retirement plan, or helping you adjust to the new normal. They'll work with you to get a clear, customized plan to feel in control and move forward with confidence. So if you're interested in working with a financial planner who you can trust to have your best interests in mind and you're ready to take the next step, visit centerfinplan.com. That's centerfinplan.com and schedule a conversation. Center for Financial Planning, live your plan.

SPEAKER_02:

Disclosure. Securities offered through Raymond James Financial Services, Inc., member FENBRET, SIPC. Investment Advisory Services offered through Center for Financial Planning, Inc. Center for Financial Planning Inc. is not a registered broker dealer and is independent of Raymond James Financial Services. Center for Financial Planning was a sponsor of the Divorce Rich Podcast. The Center for Financial Planning and Raymond James are not affiliated with or endorsed by the Divorce Rich Podcast.

SPEAKER_03:

Hi everyone, and welcome back to the Divorce Rich Podcast. I'm Jackie Ressler, and I am very excited to have a topic on deck today that we get questions about all the time in my office. I have as my guest today Brian Mutter, who is a lending and mortgage professional with forward, is it forward mortgage? With forward mortgage. But Brian has a specialized designation that not very many lenders have. He is a CDLP, a certified divorce lending professional. And so he's been specially trained in dealing with divorce cases, which seems like I'm gonna I want to hear more about the designation when we start talking with Brian. But the big topic that we're gonna be handling today is I have so many clients over the past year that want to take over their mortgage. Let's say that they're getting divorced, as all my clients are, they want to take over the mortgage and they think they can get a loan assumption to leave the interest rate at those low rates that a lot of people got when rates got very low. And after the divorce is done, they get a nasty surprise that they're not eligible for that. So that's gonna be the topic that we cover. Brian, before we get started though, can you tell us a little bit about how you got into this niche of divorce lending and a little bit about your background?

SPEAKER_00:

Absolutely. And Jackie, thank you a ton for having me. I'm always exciting to be, you know, have a chance to kind of talk with other professionals and, you know, kind of gain some awareness because the work that you and I do is in our respective fields, is like you said, it's a niche, right? So it's always cool to be able to kind of, you know, promote awareness. So I've been in the mortgage business since 2004. I quickly learned, now this is 2004 when if you had a pulse, you could get a mortgage. Lending standards, there were no standards, right? Um, and so it was one of these experiences where I worked in an office where everybody was having a ton of success except for me. And I I quickly realized I'm not a great salesman. Um but uh it turns out that I had a knack for uh the the back end work, the processing, the administrative stuff, the paperwork side of things. Um and so I I spent the next 10 or 15 years in the industry in a role such as that a processing administrator, uh, an operating partner, nothing ever to do with sales. And I I really enjoyed that that aspect of the business because it's it gave me an appreciation for the importance of if the mortgage is structured a certain way, it can just fly through the underwriting and we can provide a great experience for our clients. When I learned about this divorce aspect, it really intrigued me because, like I said, I always joke, like I'm a I'm a processor dressed up as a loan officer. In other words, I approach everything from a from a very practical, uh process-oriented perspective. And so the neat thing about divorce mortgage planning is it's like higher-level mortgage problem solving, is the best way that I can put it. So it's that's kind of how I got into it. There's this other neat aspect to it that, you know, when I help somebody buy a house for the first time or for the third time, they're appreciative. It's a big event in their life, and it's neat to be a part of that. But being able to help folks going through divorce with this aspect of our business is is above and beyond the typical person who's buying a home because, you know, our clients are going through divorce. It's a very challenging time in their life, and it's refreshing that we can kind of bring clarity to that process for them.

SPEAKER_03:

I totally get that. You like to sound puzzles, it sounds like.

SPEAKER_00:

Yeah.

SPEAKER_03:

Which I do too. So, okay, let's take a a bit of a bird's eye view for a minute. What is a mortgage assumption? And why are divorcing clients very interested in talking about and learning about a loan assumption?

unknown:

Yep.

SPEAKER_00:

So, simply put, a mortgage loan assumption transfers the legal debt obligation from one party to another. So, in a divorce situation where one spouse seeks to retain the marital home, this is the most budget-effective way to do it. In other words, let's say we have a situation where the wife is going to retain the home, but the mortgage is currently in the name of the husband. Or maybe it's in the name of the husband and the wife. Well, the attractive part about doing a mortgage assumption is that the original terms of that loan are kept in place. So what we're seeing right now is, you know, back in 2020, 2021, a lot of folks either bought their home at or refinance to a mortgage rate of 3% or so. So when you have somebody who's borrowed at 3%, and now they have a prospect of having to get a new mortgage at today's rates, which could be 6% or higher, it changes the complexion of them qualifying for that loan dramatically. So our suggestion in a situation where uh one spotless is going to retain the marital home, we always recommend, in other words, uh refinance is another way for that person to take over to get a mortgage to retain the home, but they lose the terms of their original mortgage. So we always recommend the first step is hey, call your existing mortgage company, explain that you're pending a divorce or contemplating divorce, and find out what your assumption options are.

SPEAKER_03:

Okay. So I've had a lot of clients do that, and they call and it's hard to get a hold of a person. Most, many of the lenders that I'm we're seeing locally here do actually allow for an assumption, but there's some problems with that. And the clients aren't always given that information on that phone call. So somebody says, I got the information, they come back. Let's say that we're in the middle of a case. I send them over to their lender. Let's see if you can qualify for the assumption first. And so they call up and they say, Yeah, my lender said that I I can get an assumption. This loan is assumable. So we move forward with the settlement, assuming that, uh no pun intended, that the assumption can actually happen. But there are some reasons why that might not be true, right? And can you explain what those would reasons are?

SPEAKER_00:

Yeah, for sure. And you hit it on the heads. A couple things. Whenever a client comes to me, and as I always do, I always recommend an assumption, especially if they have a rate, you know, two, three, four percent now, where it's unique is that the assumption process is driven by their existing lender, right? The customer service department, if you will. So my point is at that time when I recommend, hey, call your existing lender so you have to allow it, I am out of the equation. In other words, this is handled by their existing lender. Um, so so my point is I I what I hear is feedback, right? I have secondhand information. The biggest challenges that I have heard of from clients I've encountered are a few things. They don't always let you do the assumption. Although, to be honest, if they're not going to let us, it's helpful to know that right away. In other words, so then we can kind of move on to plan B rather than kind of spinning our wheels and losing time operating under the idea that an assumption can go through, but it can't. Beyond that, I have found this to be not a one-size-fits-all process, right? And it's not a uniform process either. What I mean is I've had clients who come back and said, Hey, Brian, the lender said I can assume the loan from my husband in this case. In one case, I had a client, they said they said that I, the person assuming the mortgage, would have to make six payments from an account controlled by me before they would let me assume the loan. I have also heard of lenders who say, we can do the assumption, but you have to make a what they call a large principal reduction payment. In other words, you have to make a$10,000 payment to reduce the principal, and then we'll allow you to assume the loan. So my point is that one is it's not always feasible. And two, even if it is, the hoops to jump through might look different from one situation to the next.

SPEAKER_03:

Right. And I've had clients that can't get approved, they thought they were gonna be able to assume the loan, but they don't realize that they have to go through underwriting and they don't have the income to support that loan amount. Yep. And then they're not qualifying.

SPEAKER_00:

I was just gonna say, and the the other thing that folks need to understand is it's not just a matter of, hey, my lender said they will allow an assumption, so we're good to go. And just like you said, Jackie, because again, an assumption is we're transferring the legal debt obligation from one party to another, the mortgage company is going to need to make sure that the person assuming the loan is qualified. And like you said, they're gonna have to go back through an underwriting process. I think of it kind of like a funnel, right? It's like step one is contact your lender, see if they allow it. If they do, find out are there any terms that we have to comply with because maybe we can't comply. For example, if they're gonna require a large principal payment, maybe that's not feasible, right? And then third is if they said they'll allow it, if there are no crazy restrictions or conditions, then we move to, I do what I call like a shadow underwrite. In other words, in the assumption process, it's not that's controlled by the existing lender. It's not up to Brian. But my point is if the lender allows it, the next step from for the client and I is to say, hey, I will take basic information to kind of do like a mock underwrite. In other words, I'll review pay stubs, I'll review things like debt ratio and say this should work. The reason that's important is because, like I said, just because the lender will allow it, maybe there's no special conditions, if we know that the spouse isn't going to qualify, maybe they, maybe their income isn't sufficient, maybe they're not working, maybe there's some issues with the length of employment or the type of employment, then we need to know that ASAP so that we can advise that the divorce team, hey, the assumption is kind of a plan A. It's not um, it's not guaranteed, so let's have a plan B in place as well, which could be could involve potentially a refinance or some other alternatives.

SPEAKER_03:

Okay. And other, um, I mean, I I what are the fees involved usually with a loan assumption? And I know, of course, every lender is going to be different, but what can people expect if they think they're gonna get approved for the assumption? What kind of fees might be involved with that?

SPEAKER_00:

Great question. Great question. So the caveat, right? Every lender is different, right? Generally speaking, there there are two um the fees fall into two categories. In other words, one is the the lender fee. Typically they'll charge, even if you went out and just bought a home today, like a traditional mortgage transaction, the lender's gonna charge a fee to underwrite the loan. Could be twelve hundred dollars, give or take. Um, additionally, uh title companies engaged, they're gonna have some fees. Those could probably be five to seven hundred dollars. And then um you're gonna have to pay some recording fees to the county. So generally speaking, I would say between two and three thousand dollars in fees. But again, you know, those are it's all situation dependent. But generally speaking, that we're seeing a few thousand dollars in fees.

SPEAKER_03:

Okay. I have seen a couple of cases where my client's lender has told them it's gonna be ten to twelve thousand dollars. And the big problem with that is that when you buy a new home, you can roll that into the loan. But in this scenario, with the assumption, you've got to bring that dollar, you've got to bring that cash to closing, which knocks a whole other realm of people out of being able to accomplish it.

SPEAKER_00:

It's funny, that's a perfect segue into something else that's important to point out is that in the assumption scenario, we're talking about literally just transferring the responsibility of that debt. In other words, if it's a situation where we have to take equity from the property to distribute it to one party, then a loan assumption isn't a suitable, isn't a really good solution because in the loan assumption, we can't take cash out of the property. If we're going to pull cash out of the equity in the home, well, now we're talking about a refinance. And that again, it's it's potentially feasible, but it it really changes the way that we have to structure the plan and the the settlement potentially.

SPEAKER_03:

I got it. I mean, there's so many complicated pieces here at that as we're talking through this. So let's say we have a situation where client gets the information and we decide, you know, a loan assumption is probably not going to be a good route to plan on. And the other problem that I've had with it is that most lenders won't give you the official go-ahead until you have a final judgment of divorce. So we're kind of operating under the assumption while we're negotiating settlement that something can happen. It may actually not be able to happen at all. And then everybody has to go right back to the drawing table, which is why I love the idea of bringing in a CDLE like you to give that advice about whether or not we think the person can qualify. You know how to, you know how underwriting works. So you can look at it and say, well, you know, I don't think this is gonna even though they got this information, you would even be able to maybe help coach someone on the follow-up questions to ask with their lender. So I think that it's just it's a lot of damage protection to involve a CDLP in the case. Let's say that um an assumption is not on the on the table and somebody needs to still take over the loan. Do you can you tell our listeners what are the requirements that um you would look at to see if somebody would qualify to refinance a mortgage into their own name? So in terms of income, assets, credit.

SPEAKER_00:

Great, great question, great question. So generally speaking, there's like there's three components to a loan approval, right? One is credit score. In other words, we need a certain minimum. After that, you know, it's you get better terms with the higher score. The second component is in the in the plan scenario of buying a home, we have to make sure assets does the person have enough money to bring to the closing for their initial investment. In a divorce case, what we are primarily most often concerned with is the debt-to-income ratio. In other words, I always tell folks when you go to borrow money for a mortgage, the lender really doesn't care how much money you make. They don't care how much money or how little you make. What they really care about is a function of what is your monthly debt obligation, which will include the new housing expenses, relative to your gross monthly income. So the reason that especially in cases of divorce, why this is the most frequently the aspect of the loan approval that we're kind of um most concerned with is because most folks going through divorce, divorcing homeowners, they qualified for their mortgage with two incomes, is number one. And now in a divorce situation, we have one income. At the same time, like we mentioned earlier, you know, from 2020 and 2021, there were a lot of folks who had a mortgage in the in the 3% range. And now, if they're looking to borrow today at current rates of 6%, give or take, the the loan qualification is potentially going to look a lot different now today than it did when they were buying a house as a married couple. So so we we review assets income. We typically do a credit inquiry so that we can make sure we have an accurate picture of the debts, and then we go from there. And then in a lot of cases, it's it's uh it goes one of two ways. In other words, hey, great, you know, we can you can finance, you can qualify to retain the marital home on a refinance, or if they can't, then we can look at potential. Do we have somebody who can co-sign? Can we pay off some existing debts to bring your debt ratio down to qualify? If that's not feasible, then we look at maybe we can't make it happen till we can retain the home. If you wanted to buy a new place, here's what that would look like, here's what you qualified for there. So it's our role is really all about helping them understand what are their options. And I it's especially important in divorcing cases because mortgage rules are for the most part very set. They're very formalized and and and they're they're the same, if you will. But when divorce is present, a lot of those rules go out the window. So that's why it's important to work with someone to kind of navigate what is post-divorce mortgage borrowing going to look like.

SPEAKER_03:

Yeah, it's it's so important. It's something that I never would have thought of. Uh, 10 years ago, I never would have thought that there was um, I mean, I knew that there was a lot I didn't know about mortgages. Um, but I would refer my clients to lenders that didn't specialize in divorce and didn't have that background. And I'm sure that it um I'm sure that it it impacted what they ended up with. So I know that I'm grateful to involve and it's really important for anyone listening to keep in mind that the sooner they get a CDLP involved, the better. As soon as they are thinking about, well, I'd like to know if I can qualify for an assumption or to refinance, the sooner the better. Because once the toothpaste is out of the tube and the divorce is final, it's impossible to put it back in.

SPEAKER_00:

That's that is exactly yeah. I I toothpaste in a tube is a good one. I always say, listen, once the ink is dry on that divorce judgment, certain things are set in stone and they may not be irreversible, but it can take an act of Congress to straighten things out sometimes. So it's so important to get it right the first time.

SPEAKER_03:

Absolutely. And for as far as income requirements go, a lot of my clients are going to be receiving child support and spousal support, which is not taxable income. Does that income count for purposes of qualifying for a refi?

SPEAKER_00:

Great question, Jackie. So, and this is something else that's really important when the work that we do with divorce mortgage planning is we can utilize support payments, child support and spousal support, as qualifying income for a mortgage. The trick, though, is that we can't, Fannie Mae and Freddie Mac won't allow us to utilize that as qualifying income until we can show that our borrower has received it for six months.

unknown:

Okay.

SPEAKER_00:

So to answer your question, we can definitely use support income, but there is a time, there's a runway, I call it, right? In other words, if somebody has a divorce judgment from yesterday that says they will receive child support, but they haven't received one payment, it's helpful in six months, but not today. So in some cases where during the divorce process, as the settlement is being negotiated, if if if we can see that, hey, in order for our client to qualify for a mortgage based on what their goals are, if we can see that they're going to require the inclusion of child or spousal support payments in their mortgage underwriting, then what we often can do is recommend that we start what we call, we ask the court for temporary orders, which basically says, hey, the divorce isn't done yet. And that's typically when support payments start after the divorce is done. Say, hey, while the divorce is pending, we're going to start these support payments now. And what that does is it gives us a head start on that six months of payments that we need to document before we can qualify that person with that income.

SPEAKER_03:

Yeah, that is a really brilliant idea. And that's another reason why it's important to have someone like you involved early, because you can explain to both attorneys why that needs to happen. Whereas, you know, the person saying a person, the client saying it, me saying it, it's, you know, having someone who specializes in that is so important. Um, I always I really appreciate having a CDLP on the team. There, um I always tell my clients, you know, there are areas that I specialize in and there are areas that I could dabble in, but they wouldn't want me to.

SPEAKER_00:

Right, right, exactly.

SPEAKER_03:

This is one of those areas. So is there anything else that we haven't covered that you think would be important for people to know when they reach out to a CDLP?

SPEAKER_00:

You know, I don't think so, Jackie. You know, I I I just want to underscore the importance of what our role is we're not we don't ever advocate for, you know, for for more money or more time of the kids. Well, we are literally focused on we want to make sure that our client can achieve whatever homeownership goal they have after the fact. And so, like I mentioned with support payments, for example, the having a the input of a CDLP during the mortgage process is invaluable because after I went through the training and received this certification, I immediately thought of I I could tell you at least three clients by name who I thought, oh, I couldn't help these people years ago because their divorce was structured in such a way that I couldn't do it. Had I known what I know now, I could have advised them back then in, you know, to structure the divorce in a way that could have allowed them to buy a home or retain their marital home. Right. So that there's it's invaluable, just like to, you know, engage someone like you, Jackie, to help kind of figure out what's the best way to divide the marital assets. The whole role, the purpose of a CVLP is really just to provide clarity to the divorcing homeowner for what does getting a mortgage look like after you divorce.

SPEAKER_03:

Right. Single focused and so necessary. So thank you so much, Brian, for being on the show. And I would love to have you back again. If anyone has any mortgage-related questions, I would highly encourage them to reach out to Brian, or we're gonna have all of your show notes, your our your contact information in our show notes. And if anyone has questions that they want to send into our mailbag at divorcerichpod at gmail.com, I will pass those along to Brian. So thank you again.

SPEAKER_00:

Jackie, thank you a ton. And again, I thank you for having me on. And I just I think what you're doing with this podcast is fantastic. There is my appreciation for folks like you and I has grown the more I've worked in this space. But it's so important to get the word out to everybody that divorce is way more than strictly a legal process. There are so many other aspects of our lives and divorcing clients' lives that require disciplines above and beyond what uh what a legal team can do. So thank you so much for what you do.

SPEAKER_03:

Thank you. Have a great day.

SPEAKER_00:

Yes, thanks, Jackie. Take care.

SPEAKER_03:

Bye-bye.

SPEAKER_01:

When you're facing divorce, you deserve an advocate who understands what you're going through and who's dedicated to protecting your future. At dawn, divorce attorneys for women. Our mission is simple: to help women move forward with clarity, confidence, and strong legal guidance. Whether you're just starting the process or feeling overwhelmed by what comes next, our team is here to support you every step of the way. Schedule a free consultation today and learn how we can help you take back control of your life. Visit women's rights.com slash free consultation video to get started.

SPEAKER_03:

The mailbag segment is usually hosted by my assistant, my son Kevin. But today we're gonna do, I'm gonna do a solo mailbag episode. I'm gonna read a question that we received from Jenny. Jenny is in Michigan, and Jenny has asked, her divorce is a year past her divorce has been in place for a year. How does she go about getting her share of her ex-husband's phone K? So I love to answer this question. This is one of the most common questions that we have post-divorce. In order to get any share of your ex-spouse's 4k, Jenny, you need to have a separate legal document called a qualified domestic relations order. Now, on that document, it specifies how you're going to, it's separate from your judgment of divorce. It's going to specify how much money you're going to get, all your personal information, and it's going to have a lot of information in there that it needs in order to be qualified. It's a pretty lengthy and very confusing process. Um, quadros, or they get a bad wrap for good reason because there are a lot of delays in getting them done. There are so many different players in that process, and it's just confusing. It's confusing to attorneys, it's confusing to clients. So you are not alone. However, I'm going to encourage you to pull out your divorce decree or your judgment of divorce, and I want you to look for the section that discusses how your retirement accounts are going to be divided. If you do, in fact, need a qualified domestic relations order, look in your judgment of divorce to see if anyone has been appointed to draft that order. In 99% of cases in Michigan, those orders are farmed out to a third-party expert, and all they do is draft quadros. So that person or that company is who you want to get their, you want to get their contact information. Once you get their contact information, reach out to them, get a hold of the paperwork that they need. You're definitely going to need to have a copy of your judgment of divorce. You're going to need to fill out some forms for them. You're going to need to sign their fee agreement and pay the fee. Now, most quadrant preparers in the country charge a flat fee for preparing an order. Some do charge hourly. And there might be a flat fee and an hourly component. So you want to make sure that you talk to someone and ask in advance what you can expect for the fee. It is well worth it to pay to have somebody do this. For you to try to do it yourself or to do it through AI or to even really hire your attorney to do it. The best place to go for this type of product is go to somebody that that's all they do. Because one of the largest areas of malpractice amongst family law attorneys in the country is problems related to quadros. So this is a very specialized field. Pay the fee, get the quadro done by an expert. So once you get that process started, you can expect that it's probably going to take about three to four months for you to actually get any of that money. So it is a long process. It can be, it can be quicker than that. If it's quicker than that, then you got a bonus. Think of it that way. But you can anticipate that it's going to take three to four months from beginning to end to complete the quadro process. I also have an audio episode on this topic that I'm going to link in the show notes for anybody that wants to listen. But please feel free to send us your questions at the divorce rich pod at gmail.com. And we are running a special promo for the month of January. The Divorce Rich podcast is going to the movies this month. We are sponsoring a screening of the first Wives Club, really awesome older movie with Goldie Hahn, Bet Nidler, and Diane Keaton in the Michigan Theater in Ann Arbor on January 28th at 7 p.m. And I'm going to be live and in person participating in a panel discussion after the movie about divorce and finance with other experts. So we are going to be giving away for the first five people that send us a question this month, we are giving away two free tickets to that screening. So again, please send in your questions. We'd love to hear them. We'd love to answer them. And have a great day.

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Jacki Roessler, CDFA

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