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If you include these 5 elements into your divorce settlements, you will set yourself apart from the thousands of family law attorneys who do not know these principles of mortgage qualifying. And, will help grow your practice, making it more efficient, and will solve your clients' house-finance issues.
We apply these principles in the context of specific cases wherein a client is qualifying, real-time, for a mortgage transaction.
This stuff works. It has to. I make $0 if they do not work.
This is also why every divorcing homeowner NEEDS to CALL NOW and START EARLY with both you and me.
DO NOT TRY THIS ON YOUR OWN. Call me for a specific Assessment/Approval with recommendations for the settlement. I can guarantee funding when our specific - CUSTOM MADE - recommendations are followed.
In mediation, for example, you can say “here is the broad outline of the house-spouse’s ability to get a mortgage loan for this contemplated property award. Naturally, like the old man himself (Noel Cookman) says, every deal has to be customized. So, we have to get his team involved ASAP. But, THIS, I DO KNOW.”
Have your clients START NOW! Please trust me on this. In 25 years, I have NEVER seen a client start too early.
It’s counterintuitive. That’s only because, the last time your clients got a mortgage, they didn’t do it this way. Mark it. When they say “I didn’t do it that way before,” your client will get bitten in the….
There is NEVER a good reason to delay. Only harm can come from waiting.
So, the overarching tip is that your clients should start the loan application immediately.
1. Support Income.
Get the clients to begin support (child or spousal) payments IMMEDIATELY. It’s easy. I’ll show you how. That will be part of our customized set of instructions. It doesn’t matter whether temp orders require it. The payer will not pay a penny more than he/she is doing right now. It changes nothing about the agreements. It produces “qualifying income” out of thin air. You’ll see.
2. More…Support Income
Remember the 6/36 rule – History and Continuance. Child or spousal support as qualifying income. The 6 represents months for the required “pay history” which must be documented very precisely. But, that’s not all. The second number – the 36 – represents the number of months which the support income must continue.
But here’s the kicker, it’s the start date that matters. When does the 3-year continuance begin? It begins with date of application.
This is one of the reasons WHY STARTING EARLY is SO IMPORTANT.
3. Structure other types of income as support income wherever possible
Whereas child or spousal support requires a pay history of 6 months, receipt of payments from a “note” or “payout” requires a 12-month pay history and, still, a continuance of 3 years.
In a recent case, the agreement was for one spouse to pay $3,000/month in child support and $5,000 in a payout over time for the other spouse’s interest in a company for 3 years. Since, we had already started the parties on a regime of support payments, that income was going to be qualifying income by the time of final divorce. But, even had the parties begun a regime of business buyout payments at the same time, it would take an additional 6 months (6 months already, plus another 6 = 12 months) for that income to be qualifying income). So, while the spouse is receiving $8,000 each month, her qualifying income is only $3,000/month, the support income having fulfilled the required 6 months receipt.
This requires two more math steps to arrive at the right amount. It has to do with discovering the amount of the total business buyout and reverse engineering how many months the payments could be spread out.
We reverse engineer everything anyway.
4. Convert assets to an income stream when there is a potential need for the recipient to qualify (with support income) for a mortgage.
There are multiple strategies here. But, both qualified and liquid accounts can be converted to “qualifying income” without damaging the accounts or reserving them ONLY for purposes of income production.
When larger sums are to be transferred, there is a way for that asset to be converted to qualifying income, requiring only one month of distribution from that asset account. Sometimes we do not even need the one-month distribution of income from that asset account. This is astounding.
Attention “high net worth” attorneys. This is HUGE. And, it’s fairly recent. I’ve never targeted you for advertising. The category of “high net worth” matters to me only because certain rules apply to “jumbo” mortgages (2026, amounts over $832,750, and up to $1,249,125 for single-family homes in high cost areas) that do not adhere to conventional or FHA/VA guidelines. The strategy to get those deals done differs somewhat from my sweet spot of “conforming” loan amounts.
But, high net worth people like to keep their money and borrow cheap money. And, unlike many years ago, EVERYONE must be evaluated for the ATR – Ability To Repay. And, having large assets does not necessarily get them a loan with their banker. It’s against the law to lend money to rich people unless – by mortgage lending guidelines – you document their ATR.
5. Never rely on what you hear from non-invested people – even from mortgage professionals – EVEN from CERTIFIED divorce mortgage professionals. Always call me.
Is this just shameless commercialization and self-promotion? Absolutely.
But, it’s more.
Unless a lender is guaranteeing funding of the mortgage loan and has already underwritten to the future – i.e., underwritten what the final settlement is going to look like – you have nothing reliable at all. The only predictable outcome is disaster.
So, Aunt Sally’s hair stylist’s pet sitter’s ex-boyfriend’s, 3rd cousin twice removed who just started in the mortgage business but is “really sharp,” cannot guarantee cannot be trusted with something this serious. Sorry, Aunt Sally.
Professional Certifications. They’re like a lot of certifications. People pay for image. $2,500 for some impressive-looking course and vetting to see if you’re the kind of person they’re looking for; followed up with $500/year to stay in the club and you get to use their logo in your email with the 3 or 4 letters that follow your name.
How do I know this?
The performance of the professionals
There are at least 4 “divorce mortgage” certifications in the USA. A few years ago, I tuned in, by invitation, to a presentation given by a “Divorce-Mortgage Specialist.” The speaker introduced himself and let us know that he was the only person in the country that possessed all 4 of these certifications. So, I thought, this should be a good listen. I was primed and ready.
First of all, he did a stellar job of describing, in general, how a mortgage works. This is actually important information for attorneys to know.
Then, he walked us through a scenario wherein he dealt with support income and how it needed the 6/36 formula, etc.; he dealt with the buyout to the out-spouse, and he dealt with Loan To Value (LTV) and Debt To Income (DTI) ratios and how he solved a couple of issues and produced a refi loan with a buyout.
I kept waiting for him to introduce at least one or two of the simple strategies we have used for many years. But, by the time the divorce was final in his example case (and support payments had now been ordered), he was at least 6 months away from closing the loan. Andy and I identified at least 3 MAJOR strategies he never implemented. The divorce mortgage specialist had no idea what they were.
I was floored.
So much for $10,000 on national-branded divorce-mortgage courses and certifications. I will never have 3 or 4 letters after my name. I’m satisfied with turning people’s white paper into green money and helping thousands of divorcing folks keep their children’s habitual residence.
My pronouns are Thee, Thou, Thy and Thine; and if you need to call me by a title, “Your Eminence” works just fine. Ha.
Here’s what’s important. I know my way around divorce and mortgage financing. I kicked this off over 25 years ago.
If I say we can close the deal, we do it. And, we’re batting 1.000! (which is written as 1 or 100% mathematically - so I don’t know why they call it “a thousand”). But, if everyone follows the instructions, we score every time.
We turn white paper into green money.
Thanks for reading. Email me and ask your questions. Or leave a comment here.
Noel Cookman
The Mortgage Institute
