Divorce question: Wife awarded house, Husband required to stay on mortgage...

[Josh]

The question is, does the husband have insurable interest?

To be more specific:

Husband and wife are both on the mortgage and both on the insurance.
Wife was awarded the home and wants Husband removed from deed, while Husband remains liable for substantial mortgage.
Wife has no intention of refinancing or assuming the mortgage.
Mortgage company has no issue with Husband being removed from deed.

What are the risks? Is there an insurable interest?

Examples of concerns:

Scenario 1:

Wife is incapacitated to do accident or illness. While she is alive, she is not capable of making decisions. While she's in this state there is significant loss (fire, tree falls on the roof, etc). Husband remains liable for the mortgage and the property being repaired is in his best interest, but if wife isn't making the decision, can he file the claim and oversee it?

Scenario 2:

Wife is incapacitated due to death. House burns to the ground or other substantial loss, with no estate in place (or a contentious/non-responsive one), Husband (I guess I should be saying ex-husband) has no authority to oversee the repairs or the claim, yeah?

 

[goillini52]

The question is, does the husband have insurable interest?

To be more specific:

Husband and wife are both on the mortgage and both on the insurance.
Wife was awarded the home and wants Husband removed from deed, while Husband remains liable for substantial mortgage.
Wife has no intention of refinancing or assuming the mortgage.
Mortgage company has no issue with Husband being removed from deed.

What are the risks? Is there an insurable interest?

Examples of concerns:

Scenario 1:

Wife is incapacitated to do accident or illness. While she is alive, she is not capable of making decisions. While she's in this state there is significant loss (fire, tree falls on the roof, etc). Husband remains liable for the mortgage and the property being repaired is in his best interest, but if wife isn't making the decision, can he file the claim and oversee it?

Scenario 2:

Wife is incapacitated due to death. House burns to the ground or other substantial loss, with no estate in place (or a contentious/non-responsive one), Husband (I guess I should be saying ex-husband) has no authority to oversee the repairs or the claim, yeah?

Are you asking for a "friend"?

Just kidding.

 

[adjusterjack]

Wife is incapacitated to do accident or illness. While she is alive, she is not capable of making decisions. While she's in this state there is significant loss (fire, tree falls on the roof, etc). Husband remains liable for the mortgage and the property being repaired is in his best interest, but if wife isn't making the decision, can he file the claim and oversee it?

Let's back up a bit. They got divorced. The divorce is final. He quitclaimed the house to her and his name got taken off the homeowners insurance.

That leaves him a guarantor of the loan. A guarantor of a loan has no rights, only the obligation of making the payments if the borrower defaults.

Therefore he has no insurable interest.

However, he wouldn't need insurable interest to file and administer the claim if he had either power of attorney or court ordered conservatorship over his former wife.

Wife is incapacitated due to death.

I should hope so. Otherwise she would be a zombie, running around growling and eating brains.

House burns to the ground or other substantial loss, with no estate in place (or a contentious/non-responsive one), Husband (I guess I should be saying ex-husband) has no authority to oversee the repairs or the claim, yeah?

No authority at all unless he opened probate and was appointed representative of the estate.

Even if he had power of attorney or conservatorship as noted in the previous question, those died with the decedent.

In both examples the homeowner's policy would name the mortgage company as loss payee so any claims filed by an "authorized" party, would still protect the mortgage company.

 

[kgmom219]

He's about to get screwed over.

She lets the house go into foreclosure.

Files bankruptcy.

Guess who gets the bills?

Never, ever leave your name on the mortgage.

Hell hath no fury like a woman scorned whose love has turned to hatred.

My 2 cents.

 

[Life Hawk]

Wow!

My only question is, does he still have to pay the mortgage after he is incarcerated for shooting his divorce lawyer?

...and if is wife is incapacitated after death, can she begin collecting on SSI?

 

[adjusterjack]

My only question is

That was two questions.

 

[Heather]

How much of a house are we talking here?

What women can't get jobs and pay their own bills anymore?

 

[Life Hawk]

That was two questions.

You got me there... the second one was one of those "I just can't resist" ones.

Sort of like when you tell folks you "are catching everyone and just one catch them for a second or two"... an hour or more later your getting their signature.

 

[djs]

Actually, owing money on a loan that has a lien on a house provides an insurable interest. But then, its not like you can really take out a second homeowners policy, the ex-wife should have one (needs to have one as part of the loan agreement) and then that fulfills the insurable-interest for the loan purposes.

You also have a life insurance insurable interest for the amount of the 'shared' loan. This solves the death problem, life insurance pays out, pays off the mortgage, done. Yeah, its not free though. Also doesn't solve a plethora of more likely scenarios of not making payments, bankruptcy, letting the house fall apart, etc.

 

[Josh]

He's about to get screwed over.

She lets the house go into foreclosure.

Files bankruptcy.

Guess who gets the bills?

He is already screwed over

If she misses a payment he can file with the court to have the house sold so it's no longer his going concern, so at least that aspect is a non-issue.