Business & Money

December 18, 2012
 

Find Out How to Avoid Foreclosure

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If your name isn’t on your mortgage or deed, take these steps now — or you could face eviction

First you lose your husband, then you lose your home. Talk about back-to-back blows.

While there are no exact numbers, widows in their 50s and older these days are among the most vulnerable to foreclosure — and some are facing eviction because they can’t afford to pay the mortgage on their own.

(MOREWomen Should Plan for More Than One Inheritance)

(As an aside, in general, homeowners over 50 are the fastest-growing group facing foreclosure. According to a July 2012 AARP study, the rate of foreclosures among people over 50 increased by 23 percent from 2007 to 2011, resulting in 1.5 million foreclosures.)

Money Troubles Widows Face

For widows, the problem is exacerbated by pure economics. Combine the fact that they’re often outliving their husbands with the problems of pension cutbacks, the loss of a Social Security check and rising medical bills (sometimes, the ones left behind by their husband after a long illness), and the result is that many widows face serious financial troubles.

Sometimes the loss of a spouse’s income is all it takes to make the mortgage unaffordable.

On top of all this, some of these women have made a critical mistake that’s leading to their foreclosures — and you need to avoid making the same one mistake. I’ll explain how, below.

As a recent heartbreaking New York Times article noted, many widows facing foreclosure can’t lower their mortgage payments through refinancing because the mortgages and titles to their homes are in the name of their deceased husband.

These women are out of luck if they fall behind on their mortgage due to financial difficulties. Until the payments are current, many lenders won’t let them refinance their loans in their own names or add their names to the mortgage or title.

Danger for Women Going Through Divorce

Incidentally, divorcing women whose homes are solely in their soon-to-be-ex’s names may be left homeless for the same reason.

(MOREKeep Control of Assets After Death)

The exception to that rule: If the women live in a community property state — Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin — each spouse theoretically owns an undivided half interest in the home if the property was acquired by the husband or wife during the marriage, whether both names are on the mortgage and deed or not.

If your name isn’t on your home’s deed and mortgage and you’re married, I strongly recommend you add it.

A Home in a Husband’s Name

Maybe the property is in your husband’s name because at the time of the mortgage application, he had a better credit history than you or enough income to qualify for the loan. Perhaps he owned the home before you tied the knot and you never updated the paperwork.

But that was then.

You’ll want your name to be on the documents in case your husband dies or the marriage ends. Sharing property ownership can come in handy if you divorce and your spouse has a bad credit history, as I wrote about in my Next Avenue blog post, “Don’t Let Your Ex Ruin Your Credit.”
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A Latino couple goes over mortgage documents with an estate lawyer.

Kerry Hannon has spent more than 25 years covering personal finance for Forbes, Money, U.S. News & World Report, and USA Today. Her website is kerryhannon.com. Follow her on Twitter @kerryhannon.