Question: During our 21-year marriage, my husband handled all of our major financial decisions. He was also instrumental in building the small lake cottage that we enjoyed on the weekends and during the summer. I didn’t mind because he was good at it, I trusted him, and his willingness to deal with the finances freed me to concentrate on my job and on our two children.

When our marriage began to unravel two years ago, he moved to the lake house (about 20 miles away). When I knew he was not coming home, he assured me that we could resolve the finances ourselves, and I agreed to go to mediation so there would be no expensive fight with lawyers, etc. I had no choice but to accept the budget figures he gave me, and the mediator really didn’t pay much attention to anything except the monthly payments, because I had to make sure I had enough money to make ends meet. The mediator even commented on what a good job my husband had done with our budget. I kept the house subject to the debt, he got the lake house subject to the debt, and we divided up the cars, retirements, personal property, etc. I did not accept alimony, and he pays child support until the children go to college next year. He went to a lawyer, I was not represented when I signed the mediator’s agreement, we got divorced, and a judge confirmed our agreement.

Now, two years later, I am in a fix and I understand for the first time what he did to me. My husband kept telling me that he was refinancing our home to get better interest rates, but it turns out that he was using the equity in my home to finance the majority of his lake property, not to mention his furniture and his automobile. My car, though, is financed with a regular car loan that I am still paying.

I thought he was a magician because he always kept our mortgage payments so low, but when I tried to refinance my home, I learned that my ex used a series of “interest-only” mortgages over the years that did not make a dent in the principal, but in fact increased the debt so that my home is now mortgaged to the hilt.

My mortgage will be “re-amortized” at the end of this year, and my payments will go up radically unless I can refinance. During this time, my property taxes have increased substantially, as have my health insurance premiums and the general cost of living. I don’t have enough money to pay my ongoing bills, including credit cards that I have used based on the low mortgage payment. But when I tried to refinance, I was told that my debt-to-income and equity ratios would push me to a higher interest rate, assuming I could get a loan. I have become a substandard risk!

I went to a lawyer who said I was out of luck because of the time lapse, and because, if I had investigated at the time we separated, I could have learned everything I now know. Today, my husband and his new wife are sitting pretty in the lake house I am still paying for. I am writing in hopes that I can warn other women to be more careful than I was.

Answer: We agree that failure to participate in and investigate financial matters both during the marriage and at divorce is a “Big Mistake.”

Today, the mortgage business has become a very complicated, specialized field. While interest-only mortgages may be good for some people because they provide the lowest payment possible, the flip side is that nothing is being paid on the principal, and that can’t be deferred forever. This type of financing can be very dangerous to folks like you who are unsophisticated in financial matters and find out, quite after the fact, that you have a problem.

Because you could have found this out had you investigated these issues before you divorced, you have no ax that any court will grind.
As your situation has proven, even the most amicable divorces can turn out poorly. There is no substitute for another set of eyes – a lawyer’s – helping you investigate and reviewing your documents before you sign them.