March 2010 Newsletter
Table of Contents
1. New Law Protects Assets During Divorce
2. Credit After Short Sale
3. From the Desk of Carol Ann
4. Make Money While You Sleep
5. Free Teleclass
6. Divorce Survival Kit
7. Thought for the Day
1. New Law Protects Assets During Divorce
In an article by Emily Jane Goodman, New York State Supreme Court
Justice, she talks about a new law in New York. This law is already
in affect in many states. Hooray for New York for getting on board!
She says the following:
"The mere mention or even the thought of divorce often
sets off a race to the bank with each spouse trying to get hold
of assets ahead of the other -- and before either one appears before
a judge."
But effective this month, as soon as an action for divorce is commenced,
the parties cannot take any steps to change their financial situation.
Under a bill passed by the state legislature this year, the minute
a husband or wife sues for divorce by filing a summons in New York
State Supreme Court, he or she is barred from altering the economic
status quo of the marriage. As soon as the other spouse receives
that summons and a form order, it is too late for him or her to
move money or other property to shield it from claims by the plaintiff.
Until the recent enactment of the new statute and implementing
court rule, the less wealthy spouse, usually the wife, had to seek
an injunction from a state Supreme Court justice, to bar the richer
partner from removal, sale or other disposition of assets. This
meant she had to seek a court order, incurring legal fees and losing
time, before getting any financial protection. During that time,
stocks, bonds and cash could vanish.
By maintaining the status quo until the divorce case is actually
heard by a judge, and evidence of entitlement and equity can be
presented, the new statute avoids costly motions at the beginning
of the case. The race to the courthouse, like the race to the bank,
may no longer be an emergency.
As the state Judicial Committee on Women in the Courts explains
it, "Both parties are prohibited from selling property, mortgaging
real estate, depleting bank accounts, invading pension funds, running
up credit card debt, or removing a spouse or child from life insurance
and medical plans."
The statute covers retirement accounts, pension accounts, annuities
and insurance. However, there is an exception: All of this can be
overridden with the consent of the other party in writing, or by
order of the court.
Still, most divorces do not come by surprise. It may well be that
individuals who expect to divorce have already consulted lawyers
and accountants and have moved money or run up credit card bills
in advance of the critical date. There is probably no way to keep
all the acrimony over finances out of divorce."
2. Credit After Short Sale (Southern California)
An on-line article by Laurel Starks, Keller Williams Realty, Rancho
Cucamonga, CA had some interesting comments. She said the following:
"A bi-product of divorce often times is bad credit. Divorce
or no divorce, a Short Sale most likely will have a negative impact
on your credit. You probably know that a credit score is determined
by a multitude of characteristics.....payment history, availability
of credit, number of credit lines, longevity of credit, etc.
As a high-volume short sale listing agent, I like to stay in touch
with my clients to track their credit and rebound ability after
a short sale. One of my clients just called me last night to give
me an update; I thought I'd share her story:
I did a short sale that closed escrow December 2008. My clients
had stopped making payments on both of their loans January 2008.
The 2nd charged off to a collection company, and foreclosure proceedings
had begun. My clients had gotten a Notice of Default and a Notice
of Trustee's Sale. We extended the Trustee's Sale several times
in order to close the short sale.
My clients had 800+ credit scores prior to missing payments and
initiating the short sale. All of their other credit lines (credit
cards and auto loans) were current; they never missed payments on
them. The only derogatory credit line that was reporting was the
house......but as stated above, it was pretty bad. Twelve months
of missed payments on 2 loans, recorded NOD, NTS and a charge-off.
Anyhow, my client just called me a few minutes ago, to tell me
that her middle credit score is 728......this is 8 months post-short
sale! She just went out and bought a new car with zero $$ down,
and was able to take advantage of the Cash-for-Clunkers program.
They want to buy another house in February, however from what I
hear about the current underwriting loan guidelines, a lender won't
lend until at least 2 years after a short sale, regardless of credit
score. This may change, but for now that is what Fannie Mae has
published.
Her credit report reads: Settled for less than owed. My clients
have not used a credit repair company. This all just "natural"
credit reporting.
We obviously can't take away from this that "every person
who does a short sale will have a credit score in the 700's within
8 months." Every situation is so unique.....it helps that my
clients did not have any other derogatory credit lines other than
their house. However, I am personally encouraged that they will
not be plagued for years with tanked credit."
3. From the Desk of Carol Ann
For some reason, I am getting a lot of calls asking the same question:
"I want to buy my spouse out of the house. Do I give him
half of the value of the house, or half of the equity?"
Let's say the house is appraised at $300,000 and the remaining
balance on the mortgage is $100,000. The difference between giving
the ex-spouse $150,000 and $50,000 is quite a bit! I spend quite
a bit of time explaining that half the equity is the value of the
marital asset.
I don't understand how they think. They certainly need you to help
them understand this. Of course, there are other factors to take
into consideration. Like what other assets do they have? Are they
being divided equally or unequally? How is this person intending
to pay the ex-spouse? Different assets have different potential
values, as you and I know.
4. Make Money While You Sleep!
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5. Free Teleclass
Carol Ann will be hosting a FREE teleclass for your clients who
are going through divorce. It is called "5 Ways to Survive
Your Divorce Financially." The next free teleclass is scheduled
for April 6. Click
here for more information.
6. Divorce Survival Kit™
Do your clients have questions about alimony, child support and
division of property?
Do they want to know how to protect themselves in their divorce?
Do they want to get the best results possible in their divorce?
Do they want to make sure that all the details are taken care of?
And do they want to save thousands of dollars in their divorce?
Then tell them about The Divorce Survival Kit™. Go to www.DivorceSurvivalStore.com.
I personally guarantee that your clients will save thousands of
dollars in your divorce as a result of having the information that
they receive in the Divorce Survival Kit.
And in both the Divorce Survival Kit and the Free Teleclass, I
promote you, the Real Estate Divorce Specialist!
7. Thought for the Day
To achieve real success, you must exceed people's expectations-including
your own!
- Tom Callister
Become a Real Estate Divorce Specialist!
Become the real estate broker of choice for divorcing clients!
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