Safeguarding Property in Marriage & Divorce with Ryan D. Brown (Best Lender in Palm Beach & Treasure Coast)

Matthew Brickman: 00:00
All right, so today I am joined by not only the professional one and only Ryan Brown, but one of my closest friends that I’ve known, gosh, it’s like my early 20s, and I’m 51 now. So I mean, I’ve we we’ve sort of grown up together, right, Ryan? That’s right. I mean, it’s been a it’s been many, many, many years. Um, but uh Ryan Brown, he’s the branch manager, divisional vice president, uh in Palm Beach Gardens of Cross Country Mortgage. Um, what uh what else? I mean, other than that, what other titles would you give yourself or how would you describe yourself?

Ryan D. Brown: 00:54
I would just say that we’re we’re a direct mortgage lender. Um Cross Country Mortgage is the largest uh retail lender in the nation. I operate this office in Plummage Gardens and a small office in Stewart, Florida as well. Uh, but we have the great privilege of helping people uh buy and refinance homes.

Matthew Brickman: 01:12
And you all right, and and you’ve won like awards like year after year. Like you’re it’s almost like you’re the only one.

Ryan D. Brown: 01:21
So what accolades and awards do you keep winning over and over again? Well, we have it we have an amazing team. Uh, we have won the best lender in uh Palm Each County and also in the Treasure Coast for the last three years in a row, which is a great honor. It’s more of a customer service award because you’re your realtors and your builders and your clients vote for you. So it’s you know it’s a great honor to have that. But our world revolves around that client experience and getting people into homes. We help about 300 families get into homes per year, and I’ve helped over uh probably over four or five thousand people get into homes over my career.

Matthew Brickman: 01:56
Yeah.

Matthew Brickman: 01:57
Well, you helped me get into the only two homes I’ve ever owned. So, you know, when I many years ago when I bought my condo, I was like, I don’t know who to call. I’m like, I’ll call Ryan. And you were able, actually, you did my mortgage, and then you even did my refi, um, which was awesome. Um, and then on my current home, um, I bought it with and you um you you were with cross country, and I’ll tell you, you guys were just fast, efficient. Um, I mean, for my wife and I, and it was it was an odd experience. Uh, this was in 2021. We found the home on Sunday. Um, or no, yes, yes, Sunday. We looked at the home on Sunday, we put an offer on Monday, the owners accepted it on Tuesday. We had an inspection on Wednesday. We had um then, but but then prior to that, oh you know, let me back up. Actually, let me get the time right, timeline done. I called you on Friday because my wife said on Thursday, I wonder if we could get a home. We’re like, Where do we want to be? So we put our parameters and I called you. I said, Hey, Ryan, what could I qualify for? And you’re like, Matthew, I need these documents, these documents, these documents. Now I’m a little meticulous and anal. And I got you all the documents that day. You were like, wow. Like it wasn’t like I had to go find them. And you came back that day and said, Okay, this is what I can pre-qualify you for. So then my wife and I knew come Saturday, all right, we know what we can pre-qualify for. So I called a real estate agent that I had done her divorce, and I said, I need to find homes in this area within this price range. Go. Sunday, she um, my wife found the home. We looked at it Sunday, put the offer in on Monday, they accepted it on Tuesday. We had actually had the appraisal on Wednesday, had the expression inspection on Monday, and then you guys closed us three weeks later. I mean, it was a fast process. Now, I granted I had every single document, like boom, boom, boom, boom. But your people were amazing, they were fast, efficient, um, loved the experience. Um, so you know, usually also, you know, just like Who Wants to be a millionaire, you are my lifeline in mediation. Like, I’ve either calling you or texting you, like when I run into something. You’re probably into mediation, yeah. Yeah, and I’m like, hey Ryan, like uh can you help me on this answer this question? So I’ve got some questions for my listeners, uh, just common things that come up. I’ve got five questions, and then you can just you can dump truck it everything else back on me. But let’s just start with question number one. So I run into a lot of times where a married couple, they’re getting divorced, and they’re both on the mortgage, one of them wants to keep the home. And so it’s like, all right, we need to get one of the people off the home because one of them wants to buy the other one out. So we’re left with, you know, what I understand, two options. We’re either refinancing the mortgage so that we can remove someone, or they’re doing an assumption of the mortgage so they can assume it so they can still get the other person off. I have only, and Ryan, I don’t know if you I don’t know if I ever told you this or whatnot. It was way back in my career. I’ve been doing this for uh 18 years. I ran into one mediation only. It was a Fannie Mae mortgage, and it was fine print that said, in a divorce, we can simply remove. They didn’t have to refi or assume. We just they just had to present a divorce decree and they removed them. I’ve never, ever, ever had it other than that one mediation. It was like the unicorn of all unicorns, right? Usually it’s refi or assumption. So talk to me about like the differences, the process, requirements, timelines, because those are the things that my listeners need to know. And also, you know, for me, when we’re building these things out in mediation and drafting them, we’ve got to build out the processes, and I want to make sure that we’re getting those timelines, right? So we’re not saying, hey, you’ve got to do it within 30, and you’re going, Matthew, it takes at least 60 to or 45, right?

Ryan D. Brown: 06:05
So talk to me about the difference there. Yeah, absolutely. I mean, there’s a there’s a lot of there’s a lot of nuance there. So the best thing to is really to determine what kind of mortgage do they have now? Is it FanDeam? Is it FHA? Is it a VA loan? Is it a private mortgage? And also determine what the current terms are and how does that compare to current market rates? So, for example, let’s just say you have a 3% mortgage because you got it back in you know 2021 or 2022, and current rates are at say six and a half. So, of course, you want to try to keep those original terms. So, in that case, you should always try to go for an assumption first because an assumption doesn’t change the terms of the loan. Now, in the case where let’s just say you bought maybe a year and a half or two years ago and your rate was seven and a half or seven and seven eighths, um, you might want to just refinance to get a loan rate, anyways. Um, because you can refinance, remove the person from the title and from the note, and then get better better terms. So you kind of have to determine the baseline first, and then from there, you know, determine which option is going to be the best. Now, on the assumptions, so it’s really serviceer specific. So a servicer is so Fannie Mae, FHA, the VA, they don’t service loans, meaning that they don’t do any of the customer service portion of the loan. Like they don’t collect payments, they don’t have an online portal. So they have servicers service it for them. So it’s so technically it’s up to the servicer to allow an assumption to go through. Um, most servicers are gonna require, in a divorce situation, obviously, proof of divorce, and they’re also gonna require that the one spouse, whoever’s assuming the loan, can qualify for it.

Matthew Brickman: 07:54
Okay.

Ryan D. Brown: 07:55
So that’s really where it can become a little bit of a problem, is if they cannot qualify for it. Because you have to think about when they originally originated this loan, they used two sets of credit, two sets of credit, uh, I’m sorry, income, assets, etc., to qualify the loan. Now, if you remove one spouse and now you have, say, half of the income, maybe they’re both breadwinners each other the same, you remove half. Does this person still qualify to make that payment? And that’s what they’re gonna try to determine is that you know, can the person that’s assuming the loan still make that payment and not put themselves at financial risk? And so that’s what the servicer is gonna do. That’s why they don’t just have a blanket uh, okay, yeah, you can assume it. Well, sure. What happens if this person has $2,000 a month in income and the payment’s $3,000 a month? That’s just a recipe for disaster and for closure. Um, assumptions also do take a little bit of time too, typically. I think the average is around 60 days for the process to go through. But uh, you know, kind of circling back, of course.

Matthew Brickman: 08:58
Is that minimum or average? I would say average. So, so for example, for me, what should I be putting in the agreement then? Should I put, you know, should I put 90 days because 60 is minimum? Would 90 like they’ll definitely get it within 90, right?

Ryan D. Brown: 09:18
Yeah, yeah, that’s plenty of time. Either you’re gonna know it’s gonna go through or not. Okay, within yeah, within 90 days for sure. Okay. Um, but the if the assumption doesn’t work, then at that point you would go in and try to do a refinance. You know, refinance again is the other way to do it. Same thing applies there, though. The you know, person assuming that or the person that’s taking over the house is gonna have to qualify for that payment. Now, in a refinance situation, there could be other things to consider as well, but maybe in that situation, maybe the the current spouse assuming it can’t afford it, or maybe they they have income, but they can’t we can’t use it for qualifying. You can also get in like a non-occupying co-signer. So maybe the mom or the dad or brother wants to run into that, yeah, help out. You could always add a cosigner on a refinance transaction to help them, but not on an assumption. Not on an assumption, yeah.

Matthew Brickman: 10:12
Okay, okay. So so so when they’re looking at the requirements, like not just the income, they’re also looking at because like in our and and in the divorce decree and in the settlement agreements that we’re doing, we’re not just dividing up the assets, we’re dividing up the liabilities as well. So they’re are they so so they’re looking at income-debt ratio, not just income. Are they looking at credit scores? Like what what what do they look at?

Ryan D. Brown: 10:40
They’re gonna be looking at all that all credit score, liability, debt-income ratio, income. Um, they’re gonna be they’re gonna be reviewing all of that um information and making sure the person can qualify. The other thing to you know to consider too is that you know, it’s very important to have both parties, you know, whoever’s making the mortgage payment to keep making the mortgage payment. If you have a mortgage late, or sometimes you have a spouse in a divorce situation, like, I’m not paying anything until we get this settled, and all of a sudden the credit just goes goes to crap. It’s very important you keep paying it because they’re not going to allow an assumption on a defaulted mortgage or a mortgage that hasn’t had a late payment in the last third uh last 12 months. Most servicers will not allow an assumption assumption in those circumstances. Um, same with a refinance, you can’t refinance if you’ve had current mortgage lates or if you’re currently delinquent on the loan. So, in that case, if you have gone delinquent, you know, you might be in a forced into a sales situation.

Matthew Brickman: 11:43
Yeah.

Matthew Brickman: 11:44
So here’s something that might blow your mind. That’s interesting. I don’t understand it, but there are things, you know, I just put in the I just put in that box of one day maybe I’ll figure it out or understand. I don’t understand it, right? But one of the largest counties in South Florida is Palm Beach County, right? And a lot of my mediations, I mean, for 18 years, most of my mediations were Miami, Dade, Broward, Palm Beach, some Martin County, right? Of course, after 2020, um, it just blew up because everything went virtual. So now I’m all over all over the state and and uh and even the country, and I’ve done some worldwide stuff. But what’s interesting is uh Palm Beach County is huge, right? And in a divorce situation, like Broward County, one of the one of the things that is in a divorce order is what they call a standing status quo. Which means, Ryan, if the husband has historically paid the mortgage, he cannot stop paying the mortgage. He has to, there’s a stand like you have to maintain the status quo during the pendency of divorce so you don’t screw things up, right? So they’ve got that, like in uh uh Broward County, they’ve got that in all of Martin County, St. Lucie County, Indian River County, Okeechobee, all up in the 19th, right? Because you said you had an office up in Stewart, right? So in the 19th Judicial Circuit, they’ve got that. They don’t have it in Palm Beach County. I don’t understand how you can have Palm Beach County, one of the largest counties, and they don’t have a standing status quo order. And with the and plus, that’s also like the homes are usually worth more in Palm Beach County than Martin County or even Miami Dade or Broward, right? There’s no standing status quo. So I see that a lot. That either one of two things happen. Well, maybe one of two, a couple of things, not only them just the two. One of a couple things. Sometimes it’s out of spite, right? Yeah, which just just ruins everybody. I mean, divorce is hard enough, but it ruins everybody. The other thing is sometimes because of the divorce situation, either one spouse has left the marital home by choice, or sometimes they’ve been forced by court order if there’s domestic violence, or or sometimes they’re just like, look, this has been going on so long, it’s just unhealthy. I need to get out for my own mental sanity. But then they move out and they take on a rent, and then they can’t afford the mortgage, right? And they’re like, Well, you know, if you’re gonna stay there, you pay it. Well, like you said, I only make 2,000. The mortgage is three. How do I do this? And the mortgage company isn’t accepting a partial payment and going, well, that’ll be fine, right? So there’s a number of situations that can cause then the default. And if there’s not a standing status quo order, what I’m hearing, because I didn’t know that, because a lot of times they’re like, Yeah, we’re gonna try to refi or assume, and there’s delinquency, there’s problems, someone has stopped paying for whatever reason, and they think we’re gonna go in and re-fi and assume. Right. Um, and I yeah, I didn’t know that. So all right, well, what about this? Because I run into this sometimes where they’ve um what do they call it? Like when they uh when they I guess I’ll just describe it, they end up putting it on the back end of the mortgage, like maybe they were doing modification. Loan, yes, yes, yeah, a loan mod to where then okay, fine, they’re not paying. Does that affect a refire assumption, or is that sort of we change the terms and that’s okay, and then you can still re-fi and assume? How does that play in?

Ryan D. Brown: 15:35
Yeah, so a low loan modifications are typically, yeah, when you’re in financial hardship behind a few payments, you can call the servicer and request a modification or or um, you know, but basically they’re trying to help you so you don’t foreclose. So in that case, sometimes they’ll add a couple payments to the end of the mortgage, they will maybe lower the payments temporarily, they’ll provide a 40-year term. You know, there’s way different options to provide help. So, in in that case, you when you apply for a modification, you have to show some form of hardship, you have to prove it with your income documentation that there has been some changes. Um, I’m not sure if within a modification they would allow an assumption as well. Um, that’s a good question. I don’t know if they would do that. I I don’t think they would.

Matthew Brickman: 16:23
Well, well, based on what you’re saying, just if you just logically play it out, I’m thinking they wouldn’t because how did you get into a loan mod? You were behind, you were delinquent, and that dings you on a refire assumption in the first place, right? Yeah, I mean, you just sort of kind of be like, Well, if they look at that, they don’t like that, you did that, now we loan modded it. Are we gonna now refire or assume it? And usually in that case, you can’t afford it, we’re selling it, right?

Ryan D. Brown: 16:51
Yeah, a lot of times, like there’s a big emotional attachment to the property, they don’t want to let it go, but at the end of the day, they just cannot afford it. But it’s important to note that, yeah, like if there is current delinquencies, this is a great question of mediation. Is the mortgage current? Has there been any late payments the last couple months? Because if that’s the case, if you if you write in the you know, in the terms of their negotiated settlement, this has to be done within 90 days, like, well, that’s not gonna happen. You know, so either that term has to be longer so they they have time to take care of the say the refinance or assumption, um, or something else has to be modified within that settlement because if it’s currently delinquent, you’re not gonna be able to assume or refinance it, regardless.

Matthew Brickman: 17:34
Well, and and usually what we do because because people are not sitting around waiting and waiting and waiting for this to happen, especially when we’re usually talking, Ryan, about their largest marital asset, right? And so what we put in there and what what we’re always negotiating is that timeline. And we say, look, you have to close within X amount of days, or it triggers a sale. Yeah, that way it’s not just sitting, because otherwise they’ll they will sit there, play those games, and then what and then what happens is then oh well, no, I wasn’t able to. Well, then someone stops paying, then you get into that whole problem, and then everyone is losing. But but then they’re dragging out then the foreclosure, and then the other one’s like, you’re ruining my credit, and uh so a lot of times, I mean, so I always as a mediator, I always put a if this then that scenario. I play everything out in mediation like it’s an Excel spreadsheet. If this then what? If this then that, right? Which is how you set up all you know your your formulas. So, and and I put they’re either going to and I put refi slash assume. I’ll give you whatever option is necessary. Try your assumption. If that doesn’t work, refi, whatever. Here’s your timeline. And if neither of those work, then it gets sold.

Ryan D. Brown: 18:58
Another thing to note on the on the timeline piece of it, if let’s just say that the spouse that is taking over the house, they are gonna be getting like alimony and child support, and that’s gonna be their primary source of income. Um, in order for a lender to use that as effective income, you have to be receiving it for six months minimum, documented receipt for six months.

Matthew Brickman: 19:18
So for six months before that you will approve, or you have to have it on paper that you’re get penned.

Ryan D. Brown: 19:26
You have you have had to receive it for six months before we can close on a loan for you to use that as effective income.

Matthew Brickman: 19:34
So that’s so so it would be like six, uh it’d be like so. We would have to put like nine months, sort of kind of, right? Like, probably probably padd a little bit, yeah. Yep, yeah, but because they have to have that for six, and then we have our 90 days.

Ryan D. Brown: 19:47
Yep. And then on top of that, you have to have a three-year continuance. So for so, for example, like if you if you wrote in there, okay, you’re getting uh alimony for the next say three years, but then we have to wait six months to use it. Now we’re two and a half years, we can’t use it anyway. So you would have to be receiving it for like three and a half years, close on that six-month mark, and then you you’re from the date of closing, you have to have a three-year continuance, otherwise, you can’t use it as effective income. Wow. Okay, these are things like if the kids aging as a lender, we have to verify the ages. So, say one of the kids are 16 years old, you know, in two years that’s going away, so we can’t even use that as effective income.

Matthew Brickman: 20:31
So, do you require? I mean, I I I’m just I’m asking, like let’s say, for example, I send you somebody, right? Are do you require them to give you their divorce decree parenting plan so you can see the child support, the alimony, the equity distribution, all of that?

Ryan D. Brown: 20:52
We need the full divorce decree and murder settlement agreement, all the pages.

Matthew Brickman: 20:56
Okay, another question for you, because we don’t we don’t provide this to the court because we’re not supposed to and we don’t need to, right? But let’s say, for example, that we’ve got um a couple, and in the in the divorce agreement, it says that the husband’s receiving his car and the wife’s receiving her car, and the husband’s responsible for his debts, and the wife’s responsible for her debts. And then, you know, we do divide up the retirement and cuts, like we go through all the different pieces, right? So on my end, in order to figure everything out, like who should have what under Florida law to create equity where everyone gets 50-50, right? I’m running a program called Family Law Software, where I’m running an equitable distribution chart where I’m loading in all of their assets, all of their credit cards, all their values, all I mean, everything where then you get to see, okay, this is going into his column and her column, so you can see what they have. Then at the top it says, okay, here’s their total assets, their total debt, and then here’s what they’re both walking away with. Here’s your equalization payment, like all of that, right? You would need that, right?

Ryan D. Brown: 22:13
It’d be really helpful, right? Yeah, we well, technically we just need the divorce decree and marital settlement agreement. That’s what the all that is.

Matthew Brickman: 22:23
But those are the words, yeah. But but you’re looking at the words, not looking at the numbers, but you would need the numbers. Yeah, we know right. Yeah, I mean, now if you had that, that could expedite the process a little bit, right? I mean, sort of like when I gave you my documents, you had them like you’re like, okay, well, we can move this thing along.

Matthew Brickman: 22:43
Yeah.

Matthew Brickman: 22:44
Because one of the things that one of the things that I started doing on the real estate agent side. So before they see you, when you know the listing agent is selling the property, we have a private mediated sale agreement where we’ve got price reductions and they have to accept offers within a certain percentage. And they’ve and we and we name who’s the real estate agent. They’re both gonna cooperate with reasonable requests, they’re gonna both pay any um uh any fees and whatnot. They’re gonna keep the show the home in show condition, like all the rules, right? And we put in there that this is this is going to be produced to the listing agent so they know the rules, right? But that does not get filed with the court, that just gets held by the parties in the event. So going back to the to the agreement, it may say that you know the husband has 90 days to refi or assume, or it’s going to be sold in accordance with the terms of the private uh sale agreement, right? That gets held by the parties. Then in that it says you guys give this to your listing agent. I’m thinking now that that might be an extra document, the equitable distribution chart that I provide to the parties that are selling a home, because that could definitely help expedite on your end for looking for the refire assumption because you’re gonna see the child support guidelines worksheet, you’re gonna see the alimony analysis, you’re gonna see then the equitable distribution. So that should help with those three telling me about. Here’s alimony, child support. Then you have the written terms of how long, like when’s it start, how long, and then you get to see okay, like income debt ratio, there you go. Here’s their assets, here’s their liabilities, here’s what they got. They’re both negative $20,000, like right. Yep. You would get to see, okay, what are their incomes, taxes, net incomes, you get to see all that breakdown. I’m thinking that I might need to put something in my agreements that says that upon request, they’ll provide those documents and I just give it to them from the beginning, and then they have those for you. Yeah, it would definitely be helpful for sure. That’s good. All right, so anything else, anything else we need to know about refi versus assumption?

Ryan D. Brown: 25:12
Um, refi versus assumption. You know, no, the biggest thing is obviously the terms change in refi, they don’t change on assumption. Um under both cases, you’re gonna have to re-qualify for the for the most part. Um you know, and then you know, you just gotta make sure that you know, before before you kind of go down that path, you whoever’s taking it over, you maybe have a mortgage lender take a look at them at their income credit, make sure that even a refinance is going to work. Because if it’s not, then it’s a sales situation is gonna be a better bet.

Matthew Brickman: 25:44
Yeah, yeah. And and so, so remember, I I told you we had about five questions. We sort of took one two of them together, because one of my other questions was you know, when qualifying for a mortgage after a divorce, what would a mortgage company consider based on how they divided assets and liabilities? And we just talked about that, which was one of my other questions. So let me ask you this then. What if, let’s just say hypothetically, that the wife is go, the wife wants to keep the home. So she’s gonna try to refi or assume. And let’s say that she can do either or, I don’t care. Um, but she needs to buy the husband out of his equity as well, right? So now not only does she need to refi or assume, but now she’s got to take out a second mortgage to pay him his equity.

Ryan D. Brown: 26:39
That’s right.

Matthew Brickman: 26:41
Okay, do we need to now extend the timeline even more? Is that a whole nother process or is that inside that process? Yeah, inside of it. Okay, so it would be inside. So how does that work for?

Ryan D. Brown: 26:56
I mean, are there is the mortgage company looking at the same factors like same same factors? So on a on the refinance side of it, you know, same factors, it’s just considered instead of a rate-and-term refinance, they consider it a cash-out refinance. So sometimes the rate’s just a little bit higher, depending on the credit score. Um, and then typically in a cash out situation, you can take out your loan amount can be up to about 80% of the value, less your first mortgage. So, for example, if the if the house is a million bucks, you can your new loan could be 800,000 less your current mortgage payoff, say it’s 600, so you could have about 200,000 in cash. So in a general refinance um cash out, you can go up to 80%. The other way to do it is if you again, if you have that low interest rate first, and either you assumed it or you refinanced it to a low interest rate first, um, or you’re just keeping the mortgage the way it is. Another way you could uh getting get cash is either through a second mortgage or a home equity line of credit, and that’s going in second position behind your first. Those typically you can go up to 90% if you can qualify. Um, the rates on those are a little bit higher than conventional uh first mortgages, so you’re probably somewhere in the sevens, eights, or nines on a second mortgage, but that’s a way where you could pull cash out to give it to your spouse.

Matthew Brickman: 28:21
Current seven, eight, or nine. Like in a year or so, who knows what it could be. But current, current it would be about a seven, eight, nine. So, so for example, one party could refi and inside that refi, pull out the extra money and then just have one mortgage that refi, removed them, and got them the money. Um or maybe they refi, and for whatever reason, maybe they would take out a home equity line of credit. Um, I typically run into what what I see is they assume so they can keep, say, for example, that 3%, not refi and lose that to now six and pull out at seven or nine, right? That they want to assume, keep that at their low rate, and then just take out a home equity line of credit that that that smaller piece is at the higher amount.

Ryan D. Brown: 29:17
Correct. Yeah, that would be the best strategy for sure. Okay. Um downsides to that? I mean, not really. I mean, the the difference of second mortgages, the home equity line of credits, they’re variable where the rate’s not fixed and they don’t amortize, meaning the payment doesn’t go down over time, they’re just interest only, versus fixed second mortgages, they amortize. Um, and they usually have a little bit lower rate. So they would just want to make sure they do a consultation with their lender to find the best product that would fit their needs. Got it, got it.

Matthew Brickman: 29:50
Um so let me ask you about this. So, this is something new that I think…