The Upside Down Mortgage

What to do if you can’t sell your house

I attended a divorce mediation conference recently where someone said that 24% of American homeowners were “upside down” on their mortgage, meaning that they owed as much or more than their house was worth.

While I don’t know if the figure is accurate, I do know that a significant number of couples I am working with are having a difficult time selling their house because of the amount due on their mortgage. And to make matters worse they cannot afford to separate until they sell. If you find yourself in this situation, what can you do?

One option is to continue to live together as roommates until you are able to sell your house. This option, however, requires careful thought in a number of areas, including:

• How will you share the payment of your expenses?
• How will you decide what price to sell at?
• How will you parent your children while living together?
• What “ground rules” do you want to establish with regard to dating?

Sharing expenses will first require you to determine exactly what is considered a “joint” expense. Once you have done so, you can then determine how much each of you will contribute to those expenses. This can be done as a percentage of income or a specific dollar amount.

After you have decided how you will share expenses while living together, you should decide how you will agree on an appropriate selling price for your house. This can be calculated by how much of your outstanding debt needs to be cleared in order for each of you to afford to live separately. This will also help forestall arguments as to what price to accept when an offer is made on the house.

The discussion about parenting should include how you will tell the children about the divorce, if you have not already done so, and how you will determine when each of you will spend time alone with the children. It should also include how to deal with family events such as birthdays, holidays and other significant occasions involving the children.

Finally, there should be a discussion about the possibility of dating and any understanding either of you want to have in this regard. Some points to consider might be:

• Whether it would be a problem for either of you, if your spouse began dating while you are still living together.
• How you would inform each other of the fact that you are going out on a date.
• Whether and how your children will be told.
• How to deal with family and friends who might see you out with someone else.

Since it may be a while before the house is sold, especially in today’s economic climate, if you make the decision to live together as roommates, all of these terms should be included in a written agreement in order to minimize the potential for conflict in the future. And the best way to create an agreement that will work for both of you is to use the services of a trained divorce mediator. With everything spelled out clearly, both of you can increase the chance of being able to remain in the house together until you are able to sell it.