Why Collaborative Professionals Should Recommend Divorce Lending Professionals
As a Collaborative divorce professional, your goal is to guide clients toward sustainable solutions. When client’s own property, recommending they work with a Certified Divorce Lending Professional (CDLP) can be crucial for creating agreements that function in the real world.
The Mortgage Knowledge Gap
Even the most experienced attorneys can’t keep up with constantly changing mortgage guidelines. As mortgage divorce professional, Cheryl Hubbell puts it:
“I believe we can all benefit from one another’s expertise in order to ensure the best results for our clients.”
When clients work with CDLPs, they receive guidance on refinancing, buyouts, and purchasing new property—ensuring your legal agreements align with financial realities.
Preventing Implementation Problems
Recommending mortgage specialists early helps you avoid the frustration of crafting agreements that financial institutions won’t honor. Your clients don’t return months later when they discover their settlement doesn’t work with lender requirements.
Divorce lending professional Cindy Scobee notes:
“If the settlement doesn’t align with lending guidelines, it could significantly hinder the ability to purchase a home post-divorce.”
Success Stories: The CDLP Difference
Creative Solutions from Cindy Scobee
“One case that stands out is when the husband wanted to buy a new property, and the wife wished to stay in the marital home. She needed to do an equity buyout for the husband to purchase, meaning she would need a Home Equity Line of Credit (HELOC). After we discussed the structure of this, the following day, the wife called me to say she now wanted to buy a new home instead.
The key challenge was that we had to secure debt for both the marital property and the new properties they each wanted to buy separately. Also, a large portion of their assets was tied up in the marital home.
We structured the loans with as little down payment as possible—just 5%. However, the wife didn’t qualify to hold both mortgages. After some back-and-forth brainstorming, I asked if she had anyone who could co-sign to help her qualify for the new home. This suggestion led to her mother agreeing to help.
Ultimately, both the husband and wife bought new homes, and once they moved out, the marital home was prepared for an optimal sale. After the sale, they each received a substantial lump sum to recast their payments. In the wife’s case, it made more sense to apply the funds and do a refinance, which lowered her rate by half a point, and her mom was removed from the loan. This was all done prior to the divorce being finalized.”
Without this expertise, the settlement might have looked fair but been impossible to execute.
Critical Timing Insights from Cheryl Hubbell
“Lending guidelines do not always reflect financial reality with high income borrowers. One couple I worked with wanted one spouse keeping the home and the other buying a new home. The case has not been filed with the court yet, and they came in to review the arrangement to see if they will be able to qualify for the intended loans. The case included significant spousal support.
Due to lending guidelines, the spouse paying the support would not necessarily be approved for a home loan if the divorce/separation was legally binding at the time of application, even though there is sufficient cash flow in which to have reserves at the end of the month. Instead, the case was put on hold for the future spousal paying client to complete their loan prior to the settlements being consummated. This allowed both parties to realize their mortgage needs and stay within the lending guidelines at the time of application and closing.”
This insight prevented a potential disaster where one spouse might have been unable to secure housing post-divorce.
Reality Testing from Mihaella Bayla
“One crucial step we take as a CDLPs is to reality-test settlement agreements to ensure that what appears to be a logical and legally sound option is also an executable lending option.
I recently worked with a couple who wanted to structure an equity buyout in stages over time. The wife wanted to keep the home but didn’t qualify for a new loan that would both remove the husband from the mortgage and provide him with his full $100,000 share of the home’s equity. The couple had agreed that the wife would refinance immediately upon divorce, pulling out $50,000, and then refinance again in five years to pay him the remaining $50,000. This scenario was not feasible because lenders require that an equity buyout fully satisfies the departing spouse’s interest in the property. A partial equity buyout would not be an executable lending option.
Instead, We looked at how we could qualify the wife now for the full equity buyout and found a creative option that was beneficial to both spouses. The wife agreed to a slightly larger buyout amount, while also assigning a higher percentage of the joint debt to the husband. The husband used the additional buyout funds to pay off all the debt. I was able to keep their loan as a divorce rate & term refinance and go above the loan-to-value limits set with conventional cash-out refinances.
The couple’s original staged buyout approach would have been extremely difficult to execute. Without proper guidance during settlement negotiations, clients may unknowingly agree to terms that are not feasible from a lending perspective. Integrating mortgage expertise into the divorce process is critical, and it helps clients create agreements that are both legally sound and financially viable.”
When to Recommend a CDLP
The ideal time to suggest clients work with a divorce mortgage professional is at the beginning of the Collaborative process, allowing for:
- Early identification of lending obstacles
- Financial options that strengthen your negotiations
- Proper alignment of financial transactions with legal proceedings
The Professional Benefits
When your clients work with CDLPs:
- Your settlement proposals gain financial viability
- Implementation problems are prevented
- Your practice stands out from firms that overlook mortgage implications
For professionals committed to true Collaborative divorce, recommending CDLPs helps ensure your expertise translates into real-world success for your clients.
Cindy Scobbe, Cheryl Hubbel, and Mihaella Bayla are divorce lending professionals specialized in supporting clients navigating a Collaborative process. They are members of KCCL.
Meg Gluckman
Meg Gluckman is a divorce & co-parenting coach specializing in working 1-on-1 with parents to navigate separation and divorce. She especially loves supporting parents who are using the Collaborative process.
