Bank can't automatically 'call in' loan after a divorce

A federal law prohibits lenders from demanding immediate repayment of a mortgage solely because a couple divorces or one spouse dies.

Q. You recently answered a question from a man who is getting divorced, and told him that he will remain liable for the mortgage on the home that he is quitclaiming to his wife unless she refinances the property in her name only. My ex-husband is about to quitclaim his half-interest in our home to me, too, but does our lender even have to know that we're getting divorced? If the bank finds out, can it order me to pay the loan off in a single lump sum?A. The lender must indeed be notified of the pending change in ownership, but federal law prohibits it from demanding that the loan immediately be paid off in a lump sum.Virtually all mortgage contracts today include a clause that requires borrowers to notify their lender if a change of ownership occurs. The plan to have your soon-to-be ex quitclaim his half-interest in the home to you is covered by this provision, because you will then own 100 percent of the property rather than 50 percent. Call your bank's customer-service department to see if it needs any formal paperwork.The federal Garn-St. Germain Depository Institutions Act of 1982, however, specifically prohibits the bank from demanding that you pay off the loan simply because of the pending divorce. It also bans lenders from demanding immediate full payment under certain other circumstances - including the death of a co-owning spouse if the survivor will remain in the home, or the transfer of the property into a money-saving living trust if the owners will continue residing in the house.Of course, the lender retains the right to demand that you immediately pay off the loan in a single lump sum and then can initiate foreclosure proceedings if you fail to make the monthly mortgage payments on a timely basis. But you have nothing to worry about as long as you keep your payments up-to-date. Talk to a qualified attorney for details.Q. We purchased our first rental property last year, and the extra deductions we were allowed to take entitled us to a tax refund of nearly $4,000. We filed our tax return in March, but still have not received a check from the Internal Revenue Service. How much longer should we expect to wait for the money?A. The Internal Revenue Service is always backed up this time of year because it's processing the millions of returns filed near the April 15 deadline. But you filed your return in March, so your check should have arrived by now.The fastest and easiest way to check the status of your refund is to visit the agency's website, www.irs.gov, and click the "Where's My Refund?" link on the right-hand side of its home page. You'll get an answer after entering your Social Security or Tax ID number, your filing status and the exact whole dollar amount of the refund that you are owed.People who don't have access to the Internet can get an update on the status of their refund by calling the IRS toll-free at (800) 829-4477.Q. My wife and I found a condominium that we would like to buy. We're worried about making an offer, though, because the bylaws of the development's homeowners association gives the board of directors "right of first refusal" to purchase any unit that goes up for sale. Is this a common provision? Should we be worried?A. Your concern about giving the board right of first refusal to purchase the condo is justified.A growing number of HOAs across the nation are demanding such rights. On its face, the trend seems harmless enough: Many buyers think it simply allows the board to match an offer that an individual might make when an owner eventually decides to sell.Unfortunately, some associations are now being accused of using their first-refusal rights to wrest costly concessions from sellers or even to screen out prospective buyers that the board simply doesn't like. Most lenders are aware of such potential problems, and some will no longer finance units in a development that's covered by an HOA's first-refusal provision. A lack of broadly available financing could hurt the unit's eventual resale value, too, because future buyers might be forced to pay "all cash" to close the deal - and they likely would demand a deep discount of the home's offering price to do so.bull; For the booklet "Straight Talk About Living Trusts," send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 2960, Culver City, CA 90231-2960.#169; 2010, Cowles Syndicate Inc.