We’re divorcing and behind on the mortgage. What happens to the house in Washington?

When payments slip during a separation, the family court calendar and the foreclosure calendar run side by side, and neither one waits for the other.

Both names on the loan means both of you are responsible

Two documents matter here, and people tend to blur them. The promissory note is the promise to repay the loan. The deed of trust is what lets a trustee sell the house if that promise isn’t kept. Whoever signed the note owes the debt. Title, meaning who owns the house, is a separate record and doesn’t always match. One spouse can be on title and not on the loan, or on the loan and not on title.

Find out where each of you stands before anything else is decided. Your closing papers from the purchase or the last refinance show who signed the note. The recorded deed shows who holds title, and you can pull it from the county: the Pierce County Auditor’s recording office for a house in Puyallup or Lakewood, the King County Recorder’s Office for one in Kent or Renton.

The servicer doesn’t track who moved out. If a payment is missed, it’s missed on the loan, and it’s generally reported for every borrower on it. Foreclosure notices go to the borrowers and to the property, so the spouse who left may not see them unless someone forwards them.

What a divorce decree can and can’t do about the mortgage

A decree can award the house to one spouse and order that spouse to make the payments. That order binds the two of you. The lender isn’t a party to your divorce, so it isn’t bound by it. If the spouse who kept the house stops paying, the lender can still foreclose, and the other spouse’s credit takes the same hit. The remedy for that is back in family court, and it doesn’t stop a trustee’s sale.

A quitclaim deed has a similar limit. Signing one takes you off title. It does nothing to take you off the loan.

A name generally comes off a mortgage in one of three ways: the other spouse refinances into a new loan, the lender approves an assumption and releases the departing borrower in writing, or the house is sold and the loan is paid off. Family-law attorneys often write deadlines into a decree for exactly this reason, such as a date by which the spouse keeping the house has to refinance, and what happens if they can’t. That drafting is their work, and it’s a good question to raise with yours early.

Community property, and why both of you usually sign

Washington is a community property state. A house bought during the marriage is generally community property even when only one name is on the deed, and both spouses generally have to join in selling it. In practice, the title company will want both signatures on the deed at closing, or a court order that allows one spouse to sign alone.

Whether the house is community or separate property can get complicated, especially if one of you owned it before the marriage or used inherited money for the down payment. That’s a legal question, and each spouse’s family-law attorney should weigh in. If one spouse refuses to sign, a court can order a sale, but that takes time, and the foreclosure calendar keeps running while the motion waits for a hearing.

Keeping the house in one name

When one spouse wants to stay, the usual path is a refinance. The difficulty is that the new loan has to be qualified on one income, often with credit that already shows the late payments. Lenders look closely at recent payment history, and some will want the existing loan brought current before they’ll consider it. Talk with a lender before the decree is final, so the plan in the paperwork is one that can actually happen.

Some loans can be assumed, which means the spouse keeping the house takes over the existing loan. Certain government-backed loans allow it with the lender’s approval, and many conventional loans don’t. Federal law generally keeps a lender from calling a loan due just because a spouse receives the house in a divorce, but that protection keeps the loan in place. It doesn’t release the spouse who leaves. Only a written release from the lender does that.

If neither a refinance nor an assumption works, keeping the house means the departing spouse stays on a loan for a home they no longer live in, with no control over whether it’s paid. Some couples agree to it anyway. Think it through with your attorney before you do.

Selling before the trustee’s sale and splitting what’s left

A sale is often the cleanest way through, because it pays off the joint debt and turns the house into money the decree can divide. The mechanics are the same as any sale covered on the selling before a trustee’s sale page, with a few additions when the sellers are in the middle of a divorce.

Both spouses sign the listing agreement, and both sign the offer you accept. Before the house goes on the market, it helps to agree in writing on a few practical points:

• How price changes get approved, and how quickly each of you will respond to an offer.
• Who, if anyone, keeps making mortgage payments until closing.
• Who pays for cleaning, yard work, or small repairs, and whether that gets reimbursed at closing.
• How the spouse living in the house handles showings.
• How the net proceeds will be held or divided.

At closing, escrow pays off the loan, any other liens, and the costs of the sale. What remains is disbursed according to written instructions that both of you sign, usually matching the decree or a settlement agreement. If the divorce isn’t final or the two of you disagree about the split, escrow can generally hold the net proceeds until you both sign off or a court orders otherwise. Your attorneys can tell you how to set that up. If you want to see the arithmetic before listing, the article on what you walk away with after a sale in foreclosure walks through each line.

Nothing about the divorce moves the trustee’s sale date. A sale has to close before it, so a quick agreement on listing matters more than it would in an ordinary divorce.

If there’s no equity: a short sale with two sellers

If the house is worth less than what’s owed, a sale needs the lender’s approval, which makes it a short sale. Lenders usually want both borrowers to sign the short sale forms and supply financial information, even the spouse who has moved out. Divorce is a hardship reason servicers commonly recognize, so the package itself is rarely the obstacle. Getting two people who aren’t speaking to gather pay stubs and bank statements on time can be.

Ask each lienholder in writing whether it will waive any remaining balance, and make sure the waiver covers both borrowers. Forgiven debt can have tax consequences for each of you, so bring in a tax professional. For how a short sale compares with letting the trustee’s sale happen in Washington, read whether a short sale is better than foreclosure.

Keeping the servicer informed while the case is open

Each borrower can generally call the servicer and get information about the loan. Two borrowers calling separately with different plans tends to slow everything down. Decide which of you will be the point of contact, or sign an authorization so a housing counselor or attorney can speak for both. Forward every notice to the other spouse, or to their attorney, the day it arrives.

If the home is owner-occupied, Washington’s foreclosure mediation program may still be available, and a HUD-approved housing counselor can tell you whether a referral makes sense. The Washington foreclosure process page lays out the notices in the order they usually arrive, which is useful for reading the dates on yours. Lay the family court schedule next to that calendar. When the two don’t fit together, the foreclosure calendar usually wins.