Reverse Mortgage and a New Jersey Divorce

If you are heading towards or already involved in a divorce, you undoubtedly have several significant questions. If you have a reverse mortgage, the existence of this type of financing arrangement may result in a few questions when considering your divorce case.

Before diving into the matter of a reverse home loan in the context of a New Jersey marriage dissolution case, understanding the definition of this time of lending scheme is important. A reverse mortgage is defined as a financial arrangement in which a homeowner relinquishes some or all of his or her equity in their residence in exchange for regular payments. A reverse home loan oftentimes is utilized to supplement retirement income.

In recent years, in New Jersey and elsewhere across the United States, there has been an increase in the number of people in their proverbial Golden Years who end up in divorce court. A commonly utilized term for these types of marriage dissolution cases is “gray divorce.” Because of the nature of a gray divorce, the matter of a reversed home loan can be an issue in the case.

An existing reverse home loan does necessitate action and consideration during a New Jersey marriage dissolution proceeding. As a matter of law and routine, both spouses are nearly always jointly responsible for a home mortgage, including a reverse derivation. (There can be some exceptions, situations that an experienced New Jersey divorce lawyer can explain.)

The disposition of a reverse home loan is one of the matters that is addressed during the settlement of a divorce case. In the alternative, if parties to a New Jersey divorce cannot reach a settlement regarding their case, including the disposition of an existing reverse home loan, the court determines what will occur in regard to assets and liabilities.

There can be some benefits that arise from a reverse home loan in the context of a New Jersey marriage dissolution proceeding. For example, in some divorce cases, the marital residence is set aside to one of the spouses. When this occurs, other assets are utilized to compensate the party who does not get the marital residence as a means to offset that individual’s existing interest in that piece or partial property.

One way in which this offset occurs is through a monetary payment to the spouse who will not be getting the marital residence in a divorce settlement. Finding funds to satisfy this type of offset can be challenging in some cases. A reverse home loan can provide a vehicle through which funds can be accessed in order to compensate the spouse who will not have possession and ownership of the marital residence after a divorce proceeding.

In the matter of a gray divorce, obtaining a reverse home loan following a marriage dissolution proceeding can be a sound alternative for a person who is awarded the marital residence. In exchange for the marital home, the party who will reside in and have ownership of the premises very well may have had to forgo a certain amount of cash which ended up being set aside to the other spouse. Because of such an arrangement, the individual with the marital residence is called “cash poor.”

A reverse home loan can aid in resolving this type of situation. This type of lending scheme allows the owner of the marital home the ability to access monthly payments made as part of the reverse lending structure.

If your spouse has filed for divorce, or if you have made the decision to do so yourself, the legal team at the Law Offices of Peter Van Aulen is here for you. Phone us at (201) 845-7400.