Advice pls: Mortgage default may be in the offing. Inform Mortgage provider now?

[LittenTree]

I want to give my friend the best advice I can so I thought I'd ask MN Wisdom for their thoughts:

We'll call her F. Her DH effectively walked out 3 years ago. She now has just one dependent DC, 15. She has made no legal arrangements at all (I know, I know) since he left. They jointly own the house F lives in, and though her DH pays nothing else- she's had to desperately scratch as many hours out of work as is poss- he does pay the mortgage. He's been in borderline financial trouble for ever ( a mid-life breakdown thing sort of precipitated the walk out).

She gets an annual statement from the mortgage provider, obv addressed to both of them. It came in Jan, as usual, she opened it and checked it, all OK, but then a week or so later she got another letter so she opened it and it was them saying the latest payment had 'failed to go through' so they'd try again in a named number of days, 4 or 5?

She's seen nothing since so is assuming he's paid it.

She cannot approach him about it as a) she sees practically nothing of him and b) flies easily into a rage if challenged.

I don't know whether she should write to the mortgagers and ask about what they can put in place should they run into problems paying (the mortgagers don't know about the separation as, I guess, why should they?) as a pre-emptive measure or whether this might be a bad idea as, in these straitened times, could it cause the bank (?) to take fright once alerted to a possible default OR might it make them be more reasonable should they not pay on time? I have always imagined they'd behave like they do re over-drafts: more understanding and reasonable if pre-warned of an impending problem (if not pre-arranged, of course), or might it seriously backfire?

Of course, the real answer is for them to talk about it and then maybe jointly approach the bank to request a reduction in payments, a 'holiday' or a re-mortgage but that isn't likely to happen, given his 'emotional state'

WWYD?

[Sarsaparilllla]

She should contact the mortage company asap and explain the situation to them - could she pay the mortgage if he stopped paying completely? If she doesn't have proper contact with him and doesn't know his financial situation he might not be in a position to pay

[LittenTree]

I'm really not sure she could manage the mortgage as it currently stands, alone.

He's paid up for the past 3-4 years but she doesn't necessarily know what he's doing, workwise.

[cestlavielife]

she needs to call the mortgage provider monday morning and offer to pay the interest only part of mortgage

she needs to get divorced properly asap and sort out the financial side of things

maybe take in a lodger to pay the mortgage ?

[LittenTree]

Thanks.

And yes, she needs to act! But it's the same old story- because he's gone through an apparent 'breakdown' (inc running off with another woman -which my friend refuses to see as The Other Woman because 'he's obviously mentally ill and really still loves me and one day will come to his senses and come back') she feels divorcing him would be an act of betrayal, walking away when he's in extremis, for-better-for-worse etc etc. But unfortunately, no one else sees it that way, least of all him!

I have another thread on the subject in Chat which has some interesting scenarios, too, like the DH taking out loans, even unsecured that if he defaults on could cause the lender to go to court to claim the house. Their house!

Argh.

[Ladymuck]

OK, not going to bother searching around for a 2nd thread, but your friend needs to take legal advice so that she understand the full implications of what she is allowing to happen. Whilst going to the mortgage company is usually the best thing to do, in this instance she has to sort out the financial aspects of her relationship with dh and her legal rights to occupy the marital home first.

[LittenTree]

What do you think the risks are regarding her right to occupy the family home for now (til the dependent DC reaches 18) are in the absence of any agreements, legal or otherwise?

the other thread not that I am expecting anyone to look but for completeness, I should post it!

[LittenTree]

I should add that someone else on that thread has also raised the possibility that her DH could raise unsecured loans, default, then the creditors could, upon discovering he has a house, go to court to claim that against the house- so she's not safe that way, either!

[Ladymuck]

Well without wishing to thrash out every possible scenario, her rights will depend on things such as whose names are on the deed. If they are both named, then the property cannot be mortgaged or sold without both parties consent. If she is not named on the deed, her position is potentially more vulnerable, and unless she acts to secure her rights, then she could lose her home.

If she cannot afford the home without her husbands financial support then she should ensure that she is trying to secure that financial support before going to the mortgage company. A bank or mortgage-provider will usually be helpful towards someone who is trying to help themselves, but unfortunately can be merciless to those who don't.

[LittenTree]

Joint tenants.

I think the long and short of it is that if he stops paying the mortgage as it current stands, ie the current repayments, they're (she's) screwed.

I actually don't know what the possible scenarios are- I've learned a lot from this thread and the other!

[cestlavielife]

on ohter thread you sa "til the dependent DC turns 18 in 3 years time,"

what does she think will happen in 3 years?
if she cant pay mortage on 3 years take on house what will happen?
were will she live?
how much equity is in house?
what mortgage will she be able to afford then?

she is being very short sighted.
she needs to think about now and long term aswell espec if DC are 18 in 3 years time.

does she work? why not, if youngest is 15? .

[cestlavielife]

if they jointly liable both can be chased for the repayments
both lose credit rating if payment missed

[LittenTree]

I don't think she allows herself to consider what might happen the day the DC turns 18, tbh. I am actually amazed that this scenario has dragged on for so long (3 1/2 years since he walked out) with no apparent change, i.e. she's scraping by, nothing financially devastating has yet happened (blown up car, etc), he's apparently managed the mortgage every month to date, with the blip in Jan which she fears may be the sound of a new can of worms opening- and why she will not seek legal advice. In some ways I think the problem- apart from a lot of wrong-headed psyche about him still loving her etc etc is that things have almost been 'normalised'. She's sort of used to living on the edge.

Prior to the split, she was working 15 hours a week. She struggled on like that for a year, then managed to get a few more hours here and there, now is on a year's rolling contract for full-time. She's on eggs about that renewal, too! The pay is 'OK' (HCP).

Myself and another friend have been as supportive as possible with a fair bit of hair tearing, but I fear that this mortgage payment issue could bring the whole edifice tumbling down when, for a bit of fore-planning, she might rescue the situation. So I'd like to be as informed as possible about what could happen and what the consequences of her speaking to the lenders now might be. And of course to tell her for the 23,678th time to get legal advice.

[RedHelenB]

Once dependent child turns 18 I have no doubt she will receive notification to sell property from her ex so the time to act is now as she may get more of the equity. Presumably the mortgage payments are in lieu of child maintenance?

[LittenTree]

They are in lieu of anything! No agreements, no discussion- just 'IS', iyswim. Which makes me think he knows what their greatest asset is (and he doesn't mean the DCs as he has had no contact whatsoever with the older 2, now young adults, but sees the 15 year old at his convenience). He knows that, come 18, he can claim half the house. Interestingly, his New Woman is a solicitor...

[LittenTree]

Everyone, DO you think that this might well be well targeted on his part? The only 'interaction' he has with his family is the odd visit with the 15 year old- and paying the mortgage- that he's prioritised this so he can come weighing in when the youngest is 18 and claim his half, working on the assumption if he deliberately defaults, the house will be sold by the bank for the lowest amount needed to cover the debt and they will be left with very little/nothing/a legal fee debt?

Could he be that calculating?

Mm.

[Ladymuck]

When they sell the house, does she have any paperwork which shows how much she has contributed? Because it sounds as if he is paying all of the mortgage, and that is what the paper trail will show? Not that that will be the determining factor, but I certainly wouldn't be surprised if he is following legal advice.

If she were to sort out a divorce now, then she would have a claim for maintenance for her son, clarity over her right to stay in the home, and certainty as to what percentage of the house she woud be entitled to when it is sold.

It is interesting that you are making the assumption that the largest asset is the home. Unless they have a lot of equity, then I would expect it to be his pension fund.

[LittenTree]

Sadly, him being self-employed, there is no pension fund as far as I can ascertain.

Grim, isn't it?

OOI, does ' legal separation' have the same weight as actual divorce re your middle paragraph? And what does legal separation entail?

Thanks for your input- this is uncharted waters for me.... and her, unfortunately. She won't get legal advice for a couple of reasons: she hasn't yet apparently got her head around the fact her marriage is over and feels that 'making it legal' finally slams the door that everyone else can already see is shut; she's a bit scared of how he'll react when he gets a solicitors letter (and hasn't changed the locks despite endless advice from us to do so...fwiw I don't believe he has entered the house for years, though he did for a while initially); she says she can't afford it, though I feel she can't afford not to.