Divorce Mediation
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V.A. Circular 26-23-10 Spousal Release from Mortgage

Posted 12/08/2023 18:15:20
Category: Divorce Mediation

In this time of high mortgage rates it has often become too expensive for divorcing couples to do what they would like to do with their jointly owned and financed home - complete a buyout of one by the other where the “buyer“ refinances the mortgage in his or her sole name and the “seller” receives cash or other mutually agreed assets. The resulting mortgage payment at the higher rate can be simply unaffordable and even if financially possible, seems like a waste of financial resources at a time when those resources are being stretched.

In the past month a new option has come to my attention for a certain group of clients where one spouse is a veteran, used his or her V. A. certificate as the down payment when the couple purchased the home, and the veteran is the “buyer.”

It appears that under V.A. Circular 26-23-10 dated 5/22/23 the non-veteran spouse may be released under an assumption leaving the low rate mortgage terms in place for the veteran. Of course additional conditions may apply, but if it might be available in your situation, it's worth looking into.

Some traditional lenders also offer assumptions so it’s always worth asking if an assumption is available, but at least for this group there appears to be a new option.

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