Full question:
I own a home in Santa Cruz with a $640,000 mortgage; which I've paid on time all along. The home is held at this point with my ex who 18 months ago borrowed $75,000 as a short term hard cash loan that is due in August of this year. My ex has really gone off the deep end and now feels unable to pay. I am having no luck finding refinancing for this $75,000 . Can I sue my ex for taking out a loan he can't repay and jeopardizing the home in the process? What about the hard cash lender; can they actually take my house from me over $67,000 in spite of the fact that I am in good standing with my primary lender with a $640,000 balance?
- Category: Debts and Credit
- Date:
- State: California
Answer:
The answer depends on several factors, including the divorce decree, home ownership, and the loan terms. Typically, during a divorce, assets and debts are divided, and one spouse cannot encumber property awarded to the other. For a loan to use a house as collateral, the borrower must have ownership rights in the property. A security interest arises only with the debtor's consent regarding assets they can control. A third party cannot create a security interest in property they do not own. If a valid security interest exists, the mortgage lien usually takes priority over other debts. This means the primary mortgage lender must be paid first before any remaining funds go to junior creditors.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.