The marital home can be a great source of emotion during the time of a divorce. It can bring back memories of first buying the home as a couple, raising your children, or hosting family gatherings. Therefore, deciding to sell the home is a decision that takes much consideration.  What happens when it really is not your choice to sell the home? What about when you are forced to do so? The marital home is usually the largest source of debt for a couple. Parties facing the financial strain of a divorce and new expenses once they are single may not want to also pay the monthly mortgage on the marital home. If the home is underwater, meaning the value of the home is less than the current outstanding mortgage on the home, it can be difficult to sell the home for a price that will relieve the total debt.

In these instances, there are two options for homeowners dealing with a divorce and financial hardships: foreclosure and short sale.


A foreclosure should be the last alternative for the marital home. This is because foreclosures can have a high negative impact on the borrower’s credit for up to seven years. This will limit the borrower’s ability to obtain additional or new credit such as a new home mortgage. The lender may pursue the borrower for the amount that is still owed on the home and the borrower may suffer a tax penalty. Usually both parties are listed on the mortgage and therefore both will suffer any adverse affects that a foreclosure may cause. Thus, both parties should work together to find alternatives to a foreclosure such as loan modifications, renting the marital residence out until it can be sold at a better price, or a short sale.

Short Sale

A short sale is a process that allows a homeowner to sell the home for less than what is owed on the mortgage. When the short sale occurs, the homeowners will then have a deficiency. For instance, if $500,000 is still owed on the home but it is sold for only $400,000 then there is a deficiency of $100,000. The lien holder must agree to accept less than what is owed on the debt while also agreeing to accept a sale price that is at or below the appraised value for the property.  A bank or lending institution may agree to this because the home would be worth less to them if it were to go into foreclosure. However, the bank or lending institution may require the borrowers to satisfy the deficiency or the balance of mortgage that is still there once the short sale is finalized.

If you are discussing divorce and are worried about finances and the marital home, please contact the attorneys at Vayman & Teitelbaum. Our dedicated team will work with you to develop a plan that is specific to your case and your needs.