HELOC Obtained without Joint Deed Holder Signature or Approval
My spouse obtained a $50K home equity loan behind my back, without me knowing about it, on our home in Virginia. We have since divorced, and now the bank is coming to me. Nothing was ever disclosed. I had no idea. What can I do?
Unwanted HELOC and Divorce
I am presuming that the property and the loan were taken in VA. If this is not the case, then the advice needs to modified (obviously). Two core issues:
- First, the divorce and the separation agreement attendant to the divorce;
- Secondly the Virginia Code section dealing with property and property transactions within a state.
As to individuals (vice corporations, etc.), there are three methods for holding assets -- tenants in common, joint tenants, and tenants in the entirety. The last two require assent by both parties before a property can be voluntarily encumbered. The first does not -- that portion belonging to one of the parties may be mortgaged or bound.
The code section dealing with mortgages is VA Code §55-48 thru 79. The rights of the parties is covered under §55-59. The federal law is called RESPA - Real Estate Settlement Procedures Act found at 12 USC Chapter 27 ( 12 U.S.C. § 2601). The Dodd-Frank Act does apply, as this is a protected transaction, but there is nothing therein requiring signature verification (not discussed in the Act) -- only that an investigation is done to ensure the signatory (grantor) is capable of repaying the loan adequately. Essentially, the federal laws point back to the state regulations in this matter.
If you held the property jointly, then your spouse could not be a grantor under 55-59 because it requires both parties, not a single party, to encumber a joint property. See generally: http://www.americanbar.org/newsletter/publications/law_trends_news_practice_area_e_newsletter_home/2011_summer/real_property_interests_deeds.html for an explanation of the different forms of ownership, and the rights attendant thereunto.
You can and should file an action in circuit court to stop any action of the bank. This action is called "Motion for Quiet Title" and causes the nature of the title of the property to be put before the judge, and forces all interested individuals (or banks, in your case) to present their claim and argue why they should have right to the property. If the banks (or individuals) fail to do so, or fail to provide such evidence as a judge may deduce some valid claim, then the title is "quieted" by removing those banks or individuals from the record books.
Secondly, you need to file to re-open your property settlement agreement (and/or order) from your divorce. A material omission, such as a $50K HELOC, from the asset and debt disclosures between the parties is grounds for finding fraud in the divorce proceedings. Move to amend the property settlement, and file for sanctions.
Finally, you can bring a private action against your ex for fraud and material misrepresentation in both the divorce, and the encumbrance and reduction in value of the property.
If you would like help with any of these items -- please give us a ring at 703-402-2723. We've been handling family law matters for years, and would be glad to discuss this further.
Sean Hanover, Esq.
Offices in Fairfax and DC
888 16th St. NW
Washington, DC 20006