Navigating Real Estate in Divorce: What Every Loan Officer Needs to Know with Jimmy Evans of Evans Family Law Group

[David] Folks, this podcast is gonna get a little personal. Talking about a recent journey I went through, but it’s opening up my eyes to an opportunity that I wanna bring to our listening audience. Many of you know I’ve heard me talk about the fact that I unfortunately went through a divorce. I went through it last year and in the course, you know, when you go through a divorce, it’s like going through war for a little bit. You know, you go, you call your friends, you find out who’s the best attorney could represent me in war because it feels like it. I mean, overall it was turning out all right, but it wasn’t horribly bad. No kids involved. We’re over, you know, been married for 40 years and we’re on the other side of it now, and I’m in a relationship moving forward, it’s all good. So it’s worked out for the better. But I met a guy who became my attorney. His name is Jimmy Evans, and he’s our guest today, and it opened up my eyes. Jimmy, first of all, welcome to the podcast. Good to have you here, friend.

[Jimmy] Thank you, David. I appreciate the opportunity.

[David] And you have become a real good friend, you are just so good, like any good attorney, you sometimes tell me things I didn’t want to hear, but you told me what I needed to hear and that’s what a good attorney does and that’s what I wanna talk about today. One of the things we talked about ’cause there’s almost always real estate involved in a divorce. Most couples own a home. And how that gets handled is, can be good or bad based on the experience of what’s there. What shocked me, Jimmy, was when I was saying you and I are talking here recently over dinner with you and your wife. We talked about how few mortgage people, in fact in your case, no mortgage people have ever reached out to call on you and you would represent all this opportunity. So listeners, if nothing else already, we’re tipping you off. Get ahold of a divorce attorney. There’s a, it’s an unmined territory. So Jimmy, let’s start talking about, a little bit about your practice, your divorce practice, and then I want to get into some of the meat of the matter, which is some of the situations that you deal with to give our originators, those that are own mortgage companies, some insights to how to contact or work with a top divorce attorney like you.

[Jimmy] Yeah. So my practice is, well, thank you very much for having me here. You’re right. We’ve become more than attorney client. We’ve become friends and, and I really appreciate this opportunity, my practice is called Evans Family Law Group. I’ve been doing this now for, I’ve been licensed for about 30 years. Doing family law exclusively now for about 18, I’ve been board certified by the Texas Board of Specialization since 2010. I’ve been part of the Texas Monthly Super Lawyers for Family Law Attorneys since 2015, and as of two years ago, I came off of a six year term of the statewide board that writes the board certification exam for family law attorneys, who want to become specialists in family law. So needless to say, family law is what we do. It’s 24/7, and you’re right, this topic is very hot and heavy and very near and dear to our practice because real estate is very much always in, almost always involved in divorce, and there’s so many different options and so many pitfalls that it really helps to have very good communication and collaboration if we can with the mortgage broker, with the bank or the realtors and the parties themselves. But there’s a lot of pitfalls, if you don’t have the right experience and in particular the right language in your final orders. So I’d love to talk about it today ’cause it, it’s definitely a problem.

[David] Yeah. Well it, and it’s, it’s a problem for the people going through a divorce. It’s a problem ’cause you don’t have anyone working with you. So, folks, the first thing you wanna say is, I think Jimmy, you would say you’re not interested in talking to every mortgage broker, mortgage loan originator out there. You want to narrow down and talk to the best ones that can deal. What would be the requirements if you’re wanting to, you know, you, I mean, we have over. We have 50,000 people listen to our podcast every day. The last thing you need is 50,000 or, or even 5,000, or even 500 trying to reach out to you and contact you, so what.

[Jimmy] I guess I should point out, sorry, I, as big as your listenership is, we are in Austin, Texas. We practice Central. Yes. That’s good point. In Central Texas. And Travis County, Williamson County, Hayes County, Bastrop County primarily. But we, but sometimes people hire me to go all over the state, but just so your listeners know.

[David] That’s good. Yeah. Well, the point of this is really to. First of all, anyone going through a divorce or needing a good divorce attorney, there is no one better than Jimmy. He has done a fab, fabulous job representing me and a number of my friends who’ve gone through this unfortunate experience called the divorce. But when you gotta go through it, you gotta get the best, and Jimmy, you’re the best. Before we get into some things I’m really excited to talk about, I wanna talk about what is the problem, define the problem that we’re talking about here.

[Jimmy] Well, the, the primary problem, especially in, in central Texas, um, as everybody knows, you know, coming out of COVID, there was a time where real estate just went crazy. The invisible hands of the market. You know, there were properties around Austin and certain parts of central Texas that literally almost doubled in value in a period of about two years. So when parties, but they parties had obtained those properties with super low mortgage rates, right? So that was at a time when parties were getting mortgage rates sub three. Like 2.6, just dumb stupid rates that, you know, were so cheap. And so then years later we’re getting divorced and now we have the compounding of several problems, right? Let’s say the parties are wanting to sell or buy somebody out or whatever. Well, that sounds really simple. Well, here we are now where we now we have the possibility of capital gains. These houses have appreciated so much, like just, it’s not like it’s gone up by $50,000 and you can consume that in your homestead exemption with the IRS, they’ve doubled and in some cases doubled in a half times in value. So now we have capital gains issues, which is not necessarily your mortgage broker problem, but we also have a problem now with the rates are at what, six or six plus. You would know better than me, but that’s double than what a lot of these people bought, you know, several, 6, 7, 8, and plus years ago. So when you are taking the house on at market value and you’re buying that other spouse out, call it $200,000 or whatever, it’s not really 200,000 because over time your listenership knows this. How to, you know, when you’re amortizing these payments, when you go from 2.4% to 6.2%, well that’s a real, that’s real money. So it’s causing, it has been causing a real problem in not only the housing market, but in divorce because people want to buy their property or they want to refinance, but it hasn’t really been an option because of the high rates and the compounding of that problem with the capital gains. So, what I’ve seen though over the last year and a half, and this is what you and I were talking about at dinner, is I wish the mortgage broker industry, and I’m just, I’m gonna let it out here for your listeners, would let these parties either going through divorce or when they buy their house, check a box and part of your closing costs is the option to elect to assume the mortgage because assuming a mortgage was not a thing for many, many, many years, and this problem that we’re talking about is so real. Coming out of COVID and starting at about 23, 24, I imagine that the market, these banks were losing these mortgages because people were having to refinance their houses, and they were having to go find better rates and whatever and those banks weren’t able to keep those cheaper mortgages, but they didn’t have a choice ’cause the parties had to do it by the divorce decree. And so, but in the last year and a half, I’ve just seen from professional experience that banks now I’m guessing from market pressure, are allowing people to assume these mortgages and keep their 2.4, 2.9 interest rate and it has made a huge difference in our practice because it allows people to keep those lower rates. Keep the numbers real, right? So when you’re buying out, you’re not paying that extra 3%. I know the mortgage brokers, the banks would love to get that extra interest in whatever, but it sure has made a big difference in our practice and our world and it makes things a whole lot smoother and the banks keep their mortgage right, their client, when these parties are able to assume the mortgage, but it’s not prevalent. It’s a lot more common than it was, but it’s not common. And it’s not in every case. So if we could talk to your listeners and we could come up with a way to communicate, how do I know in the beginning of a case that this is an consumable mortgage? ’cause that would make a huge difference in how we approach the case.

[David] Yeah, and many, much of that is determined by what was in those original documents, right? If there was a due on sale clause, and if the, does this constitute a sale? and, and that’s interpretable in many people’s minds, that’s interpretable. This really isn’t a sale. We’re refinancing, we’re removing a party from the loan and that again, is gonna come down to the current mortgage holder. And by the way, many people listening to this already know, we don’t care what the interest rates are. We would happy to have them keep it because most anyone who owns that mortgage wants to keep that loan on the books. They bought it at a discount such that they’re making money on that, even though it is sub threes. So the point of it is, is that there, it needs someone who is just gonna be willing to roll up their sleeves and look at the documents, look out a mortgage that’s there to see what can be done. So in some cases, that’s dealing with a servicer who already has the mortgage, but there’s also times gonna be financing necessary to, there’s most likely not enough equity or enough, there may, there may be enough equity. In fact, the more equity creates a problem because a bigger check has to be written to the spouse that’s departing from the home to buy the other one out. Right? And that oftentimes involves other financing. And there’s a thing called a HELOC or a home equity line of credit. So when you have the, so there’s the point of it is, is we’re now talking about a problem and we’ve addressed the problem that people wanna stay, someone usually wants to stay in their home, in my case, both of us wanted to sell the house. We’re both moving on and, uh, we’re in a place now where we are in the process now, if we just get the real estate market to cooperate and start getting some offers. We’re almost been on the market for a year here,

[Jimmy] And it’s definitely dried up, that’s for sure.

[David] It’s definitely been a, it’s been a challenge, but for those, there is, there are lots of options and this is what it comes down to where you’re looking for a loan originator or a real estate professional to work with someone who is new to the industry is probably not the right choice of a loan officer to work with you. It needs to be someone with experience. What are the type of characteristics, Jimmy, that you have found when you have worked with someone that you said, this was good and this was bad. Can you give some our listeners some guidance and then they, if they come knocking on your door or your counterpart somewhere in the United States, what is going to be the type approach to working with someone like yourself?

[Jimmy] You mean for divorce or for refinance or, or what?

[David] In a divorce and a real estate transaction Involved in a divorce, in a divorce where there’s a divorce,

[Jimmy] Well there’s a lot to unpack in that question, right? But I mean, the more information that somebody has, the more organized they can be, the better, you know, the more, like we were talking about, the more they can understand the information of their original mortgage documents and what the terms are. Is it assumable? Is it not assumable? Is there a HELOC? Is there not a HELOC? Are there liens? No liens. I mean, making sure that you have all of that basic information. Now your attorney can figure those things out, but you pay your attorney to go figure those things out. So the more organized that you can be upfront about that, the better. It also helps to make sure that we either approach the house and how we value the house, right? If we’re agreeing to sell the house, then that’s not an issue because typically we just say we’re selling the house and it is what it is once it sells, and the market will decide. If we’re approaching the house cause somebody’s keeping it, then we, we have to figure out what the value, what the equity is. So there’s either a broker opinion, people can agree to it. You know, people can use the soft approach like Zillow or Redfin or whatever, or they can just agree, you know, to an amount or you can get a formal appraisal. When that market was going crazy, the invisible market was really pushing it. The appraisals did not, formal appraisals did not catch up and so everybody was using the broker opinions. Now that that’s settled down and property and values are actually going down and settled, the appraisals have now caught up. And so now people are using either the CAD value from the county appraisal districts, which are actually pretty close right now in the last year or so, or they’re using, formal appraisals. So I would say the more organized that you could possibly be, the more helpful it is, the more that you have a defined plan in your mind as to what you think we’re doing with the house, the better. If you’re the spouse that thinks that you can stay in the house and you wanna buy out the other spouse, the more advanced you can be in terms of go ahead and start getting pre-qualified. Reach out to professionals to see if you can get prequalified. Make the assumptions based on income and debt to ratio and all that, and see if you are pre-qualified. Because when you go to negotiate those terms, if you don’t know the answers to that, you could really get in trouble. If you have six months by court order to make that happen and after divorce, or you have to sell the property and you wake up and you don’t qualify. So, you know, do those things in advance. Do your homework.

[David] When is, when is the appropriate time for. A real estate professional, a mortgage loan originator to get involved in a, in a divorce transaction, is it fairly early in the process?

[Jimmy] Well, yes, but typically that would be through one or both of the parties because we go back to that original problem that we were discussing. We need to know what type of loan are we dealing with, what, what are the terms?, because how are we able to assume it? Are we able to refinance it? Or do we just have to sell? And, and that’s the only option we have. So it wouldn’t necessarily be through the attorney directly. It’d be nice. I’d love to work with some brokers to see if we can draft our divorce decrees better. I’ve worked with CPAs, I’ve worked with money brokers, right? And professionals like that to make sure our decrees are drafted in a way I’ve even worked with title companies to make sure that the language works for them. And so I’d love to hear from some listeners about what needs to go in those divorce decrees to make their process for the benefit of the parties smoother. So I would say yes upfront, but it’s gonna be through one of the parties and the more those parties can start reaching out and understanding what their limitations are and what their options are, the better or the smoother the process in the divorce would be.

[David] Well, yeah, in my case, I mean, again, I, we made the decision to sell the house and, and where the process of doing so. But had I been going through that, you’ve already become a trusted advisor to whoever you’re working with, right? I remember at at that point, I mean, everything you said, I just learned, I gotta follow Jimmy’s advice. If I want this to go well, I gotta follow Jimmy’s advice. So I think you’re in unique position. You’re already in a trusted advisor. If you had a number of loan originators that you were familiar with, you would be more apt to refer them out to someone that you’ve already worked with and have a trusted relationship with and I think more, more times than not, you’re gonna go with what your divorce attorney recommends when it comes to a referral, then going back into the market. For, especially for someone who doesn’t understand that. And I think one of the things that I’m encouraging our loan originators that our listeners to us right now listening to this interview, say, become knowledgeable what goes on in a divorce? Get familiar with it. Do your, do your Google searching and then get a hold of attorneys. Start making phone calls. I wanna get in, I wanna be a support to you on the cases that you’re working on, here’s my credentials, let’s get at this. And if. If you don’t have a ton of experience, don’t make it up, but say that you’re willing to learn and here’s the background and this is how I approach it originators.

[Jimmy] So yeah, I would tell you going through the divorce process, you know, you have a certain checklist of steps or required processes. Yeah. And this being, dealing with the mortgage, right, is always on the list. It’s always there. One way or the other, either we’re selling refinancing or something. But what happens is most people don’t do it until it’s later in the game. Then it becomes a problem. Whereas if they could do it upfront and get that information upfront, it would be very helpful. So the best thing I could do is encourage some of your listeners if they’re involved, if they’ve experienced problems on the divorce side because the court orders aren’t written the right way, and somehow it really bungled up their backend process.

[David] That’s such an important point.

[Jimmy] That’s what I would like to hear because what I mean by when people wait, we talk to the CPAs, like we reach out to the money brokers, right? We reach out to those people, but I don’t know how to pick up the phone and call the mortgage broker. Like that’s a really difficult phone call to make ’cause you go through option one, dial this one, dial this one.

[David] And there’s such a diversity. It’s such a diversity of experience and there’s so many aspects and you, you need someone who’s a bit of a Sherpa to be kind of guide you through the process on that.

[Jimmy] And you’re right, right? We we’re one firm and we do, we’ve done thousands of divorces through just this one firm, and so we’d love to have a, a very consistent referral source, you know, for those for mortgage and originations.

[David] Yeah, I think about it. Give us some insights into some of the transactions. I mean, when that are, I always love that the stories you told me when we were working together was amazing. One of my favorite one is the guy that owned the Bitcoin in their different situations, there’s so many amazing stories, but when it comes to real estate, is there any standouts that you could share with our listen.

[Jimmy] Oh my gosh, there’s always wild stories. You know, the biggest one, probably the ones that stand out aren’t so wild as much as you, you, last year we had to deal with a spouse, the orders, the decree was to sell the house. As you know, I’m obsessed about writing very detailed language about how to sell the house. And what happens if we don’t agree to this and whatever, trying to anticipate all the problems. And we had all that language in this particular decree and, you know, God love her. The wife in that case just had some real mental health issues and she was to say she was a hoarder, was putting it politely, and she just combined with whatever the issues were in her mental health issues. She just wouldn’t get out of the house and she was just obstructing the sale in every possible way she could. And we had to go to several hearings. Where ultimately the court forced the constable to go and literally escort her out of the house and allow our client, the ex-husband to go in and it was a project to clean up that house. But you know, there’s, there’s stories like that.

[David] Yeah. There’s so many good stories and it takes a good attorney, Jimmy, and you’re such a good attorney. There’s not just a sale of a home. There’s sometimes of a thing called short sales. There’s other scenarios. Can you run us through some of the other scenarios that play out in a divorce?

[Jimmy] Well, in terms of selling the house, you know, sometimes people, like we, we had this massive increase in value. Others bought on the flip side on the backside of that, and their house values have actually gone down and that’s now, as those years have passed since that was probably in 23 ish plus. Where people bought on the backside of that huge increase in the market. So it’s not uncommon now for, for people to be coming to us where they have negative equity and they’re falling behind. They’re separated, they can’t afford the two households, so they’re falling behind. And then we get into forbearance kinds of issues, sometimes the banks will allow that. Sometimes there’s emergency relief kinds of benefits and people will reach out to their mortgage brokers or their bankers and try to figure out if those are benefits to them. But look, if there’s a forced sale and they’re not in and they’re not in foreclosure, but it’s a short sale ’cause of the threat of foreclosure, that’s a real thing. And then in divorce, we just have to deal with that negative equity to figure out how’s the best way, or even if there is a way to handle it. But again, the best way to deal with that is to be informed about it upfront. And if it’s just, the reality is we can’t keep the house and we know we have negative equity. Those who are listening, if your attorneys or if you’re going through a possible divorce, we got to accept that reality. Reach out to your bank and start having the communication. What happens if we have negative equity? What can, is there a way to sell it without it? I mean, what are the options? But it’s, those short sales are definitely a real issue right now.

[David] Is there anything else that you’re seeing come up that’s something that our listeners should be aware of.

[Jimmy] Well, I don’t know if it’s so much, you know, for your listeners directly, but the question comes up all the time about refinancing and the terms of refinancing and how long does the other spouse, who’s not going to be on that note. In the future, how long can that spouse stay on that note before it begins to affect their credit? You know, because people negotiate all the time. Like, you know, the husband’s gonna keep the house, refinance it. Well, let’s say we give him two years, three years, five years, six months. Well, how long does the wife stay on that mortgage ’cause it’s in both of their names before that starts to affect the wife’s credit. And I don’t know if your listeners know the answers to that, but, you know, most of the time I understand in the industry it’s two years before you basically get sort of a grandfather under the credit commission for that. But I don’t know the actual answer to that, but that is also a real issue.

[David] Yeah, but the, again, if listeners, if you’re looking at this, these are things you need to be researching. So when you come in to start working with divorce attorneys like Jimmy, you have the answers to because they’re trying to, you’re trying to sort through it. You’re trying to work through a messy situation. Usually they’re messy. And the last thing, you need to have a valued, trusted resource that you can depend on for.

[Jimmy] And you used the term a while ago, David. Trusted advisors, and people like me, professionals like me, divorce attorneys. We have a circle of trusted professionals or trusted advisors. Call ’em CPAs, money managers. We have realtors that we refer to, but I don’t really have, you know, somebody in the mortgage origination or the mortgage brokerage where we can refer somebody to answer these very types of questions. So it’d be nice to create that circle.

[David] Yeah. Well that’s, and I think that’s, we’ve defined the problem and now we’ve defined the opportunity, at least for those that are listening to our communication.

[Jimmy] Yeah. You know, ’cause another question comes up all the time about, well, what if I signed the deed? Like, how do I get my name off of, the contract and people don’t misunderstand all the time, the difference between title versus the loan. Right. You know, and they think they’ve signed that deed, so I’m off the loan. And if the attorney’s not careful to explain to them the difference, you know, then those people think that they’re not liable for it and three or four years later down the road, you know, their other spouse stops paying. And again, if the documents aren’t drafted correctly, they’re stuck. They don’t have any way to be protected.

[David] Right. Yeah, that’s a great point. Great point. And other scenarios that come up that you could think of that we should.

[Jimmy] Well, yeah, this, this would speak directly to your audience. ’cause again, I just took a bunch of notes about what we could talk about today, but it would be really not, ’cause this comes up all the time. Refinance assumption or sale. I mean, those are basically the options, right? So it would be really nice to have, like for our retirement. Let me analogize this by way of retirement accounts. There is a very specific checklist of information that you need in order to draft those orders that are called qualified domestic relations orders in order to get those segregated and paid to the other non-employee spouse, what I need is for one of your listeners to reach out to me in the local market and help me develop that checklist of how when we start through divorce and we’re gonna be thinking about selling, refinancing or assuming, what’s the checklist of documents? What are the phone numbers to call and what do those people need to start gathering like right up front, and get them to whoever. If there’s somebody out there that we can start referring those people to, that would be really nice to have.

[David] That’s really good. That’s a good point. Yeah. I mean, I was overwhelmed by the bounded, the document request that that’s a part of the divorce process is probably the most, the least pleasant is when you have go through.

[Jimmy] Yeah ’cause people ask all the time right up front, like, what information do you need? What documentation do you need? What records do you need? And if we know that houses or real property or real properties are involved, it would be nice to have that packet of information and a referral source as part of that trusted advisor that we can make sure people are handed off to and that they can handle that part of the divorce. That would be a very nice partnership to have. So I guess I’m asking somebody out there to call.

[David] To call. I don’t think we’ve ever had a guest put it so clearly out there. There’s a real opportunity.

[Jimmy] Well, yeah. ’cause we don’t know how to do that. Right? Like I, I know how to do the divorce, but I don’t know. I mean, I’m not the guy to handle the refi. Or the assumption or the sales side of it. Right. You know, and if we have somebody that we can pair up with our CPA referrals with our money market man manager referrals, and these other professionals that we are business appraisal referrals. Like we have all those, but we don’t really have a set source for somebody who can hold people’s hands through the mortgage brokerage. You know, that process of assumption refi or whatever and it’s not common, you know, there, and there’s maybe speaking to your audience, like you said in the beginning of this, they, they’re missing a marketing opportunity and I’m just one divorce attorney in Central Texas and I’ve handled thousands of cases and I don’t think I’ve once had a relationship with somebody like that. And so, you know, if you’re looking to reach out and network and looking for somebody you know, to, to be able to refer you couples or individuals that are buying a house post-divorce or refinancing or assuming, don’t forget the divorce attorneys, right? I mean, put them on your list and reach out to ’em. And the way to reach out to them is to help them. I’m giving you professional insight. What would help me is to help me private label a checkbox, you know, like a folder so I can give to my clients and say, oh, here’s from, you know, George Jones, he, and he’s a mortgage broker, and he’ll help you with it and here’s everything you need to do. You know, give him a call. aanother thing is, you know, and your audience knows there’s all different kinds of loans, right? There’s VA loans. You’ve got FHA, you’ve got USDA, I mean, you’ve got, you know, there’s all different types of loans and it would be, when speaking to your audience about that checklist and that folder, it’d be nice inside of that folder if part of the packet of information is the check box that’s needed, depending on the type of mortgage that you have. And if we really formed a relationship with somebody, it’d be awesome to put that on the website and have a dynamic link, you know, where people can go use that confidentially and be able to figure out upfront like what information they need, depending on the type of loan that they have.

[David] Yeah. Very good opportunity, man. I think we’ve surfaced some opportunities and ideas for our listeners to go out there. How could people get ahold of you, Jimmy, if they were interested in doing so?

[Jimmy] Well, like, like we were saying before, my website is Evans Family Law Group, E-V-A-N-S, family Law group.com. Just Google, Austin Family Law Attorney Evans, and I pop up everywhere. My office number is (512 628-2550), or my cell phone number is (512) 689-8319. I always joke as we did with you at dinner, our kids are, you know, in college we’re empty nesters, so everybody has my cell phone. It’s fine.

[David] Yeah. That’s good. Well, Jimmy, thanks so much for coming on. I really appreciate you doing this as a service to our industry, and hopefully we’re gonna hit someone contacting you that will help be a valuable resource to you, Jim.

[Jimmy] Well, hopefully we can help listeners too and, and come up with better ways to craft these court orders and things, and a process that makes it better for both.

[David] And if you’re looking for a divorce attorney, you can’t get anyone better than Jimmy Evans if you’re doing it in the, in the state of Texas. Jimmy, thanks so much for coming and being here.

[Jimmy] Thank you, David.