Can One Spouse Force Another to Modify a Loan After Divorce?

Divorce has become more common over the last few decades.  When two people become legally married, they form one financial entity.  If a couple decides to divorce, the question of how assets will be split becomes an issue.  In many cases, one spouse will maintain financial and legal responsibility of a property even though the names of both spouses will remain on the mortgage. 

If one spouse is indemnified of any responsibility to make the mortgage payments, but their name still appears on the mortgage documents, the bank may attempt to collect payment from the indemnified spouse in the event the other spouse defaults on the loan.  Even though the indemnified spouse can sue their former partner for damages if the bank goes after them, there is no guarantee that the spouse will be able to pay or make any effort to pay those damages. 

Many indemnified spouses wonder if they can force their former spouse to apply for a home loan modification after divorce.  This is a logical question since both names may continue to appear on the mortgage and the bank may pursue damages from the indemnified spouse for the failure of the other to make payments.  In short, the answer is no, one spouse may not normally force another to apply for a loan modification after divorce.

When a lender considers the modification of a loan, they consider the income and financial stability of the person who will be paying the bills.  If one spouse is indemnified of responsibility to make payments, their financial stability will not matter, and the lender will want to see the financial documents of the un-indemnified spouse.  The only way to get those documents is through the spouse paying the bills.  If the spouse paying the bills did not request the modification, they are under no obligation to surrender the necessary financial information to move forward with the modification, like pay stubs, hardship letters, etc. 

Many spouses indemnified of financial obligation to make mortgage payments think that it is unfair for them to be sued by the lender when their former spouse defaults, but if it was the financial history of both spouses that was considered when the loan was issued; the indemnified spouse becomes more like a co-signer after a divorce.  If a person co-signs for another person on a loan, the co-signer does not make payments on the loan, but agrees to accept legal responsibility if the person making regular payments defaults.

In most cases, a person can’t be forced to modify a loan after a divorce makes them the only person responsible for payments, but that doesn’t mean that a judge wouldn’t be able to compel one spouse to attempt modification on behalf of the other.  In America, anybody can be sued for any reason, whether or not the person requesting damages will win in court is another story.  Also keep in mind that a modification is ultimately the decision of the lender, not the former spouse.  How much effort a former spouse puts into pursuing a loan modification is one thing that can’t be controlled. 

Someone who wants their former spouse to consider modifying the mortgage loan should do so with civility.  The first step should be to ask the un-indemnified spouse to consider the modification nicely.  If that doesn’t work, the indemnified spouse should contact a local real estate or finance attorney to determine any legal remedies available in the event that a lender starts coming after them for damages.  A divorce attorney will do, but the indemnified spouse will want an attorney with experience dealing with lenders and mortgage related issues.    

Many wonder why a person would refuse to attempt a loan modification if it meant lower monthly payments in the face of financial hardship.  There is no easy way to explain it, but sometimes, people just do things that don’t make any sense.