Archive: October 2020

Whether divorces are amicable or contentious, divorce settlements that are drafted and finalized too quickly could be missing some crucial issues, especially if a couple shares children. This is especially important if one parent is  the primary residential parent and, as a result, may incur extra costs and could end up being on the hook for thousands of dollars.  As a result, if any of the following applies in your circumstances, ensure that you and your attorney discuss and address these issues in your settlement:

College Costs

Addressing who is going to pay for college is essential if you share a child who is college bound, as Florida does not require parents to split tuition, room, and board, and, as a result, parents cannot be forced to pay for college costs unless it is addressed in the settlement or another contract. As a result, if you are the primary residential parent (or even if you are not), it may be important to you to at least obtain language covering the cost of a four-year in-state school. Also make sure that there is language included which addresses all of the other costs that come along with the college experience, such as books, computers, meals, travel, insurance, and any other expenses that might come up.

As family law attorneys who practice here in Florida, an increasingly common issue that we deal with when it comes to divorcing spouses is addressing custodial and 529 accounts. Even when a divorce is amicable, problems can still arise with respect to budgeting for a shared child’s college plans.

529 accounts allow people to save and invest for college, while avoiding taxes. The funds, when withdrawn, are also exempt from federal taxation, as long as they are spent on “eligible” education expenses (tuition, books, housing, meal plans, computers, etc.).

Still, if not properly addressed in the separation agreement, some of them are subject to a number of changes that you may be opposed to. While the general rule is that the custodial parent becomes the owner of the 529 account, with more and more courts encouraging equal, shared parental responsibility (unless they find that it is detrimental to the child), the management of the college savings account must be explicitly addressed in the separation agreement; the contract that outlines how everything is divided. In particular, it is  very important for spouses to know that, legally, these funds belong to the child as the beneficiary, and are not available to a spouse to withdraw and use as their own.

In late August, the Department of Housing and Urban Development (HUD) extended the ban on evictions and foreclosures until 2021, protecting more than eight million homeowners with single-family mortgages. The agency had previously only extended loan forgiveness on single family home mortgages that were insured and backed by the Federal Housing Administration through the end of August.

Below, we discuss which mortgages are not covered by this development, the most recent executive order on the issue, and what other protections might be available to those facing eviction or foreclosure at this time and in the future.

What Is Not Included

Note that this extension does not include residential mortgages backed by Freddie Mac and Fannie Mae; government-run companies that guarantee approximately 50 percent of the entire US residential mortgage market, both of which last extended moratoriums on evictions and foreclosures on single-family homes through August 31.

In spite of the moratorium placed on foreclosures by the state of Florida, Fannie Mae, and Freddie Mac through December 31, 2020, the recession brought about by the pandemic is going to bring about a significant spike in foreclosures. Specifically, according to housing experts, once that the mortgage forbearance period ends, between 200,000 and 500,000 defaults and foreclosures are expected, reflecting a 70 percent increase in foreclosures alone over the next two years.

In addition, Florida has already been hard hit: According to the latest reports, the sunshine state had the country’s second highest foreclosure filing rate in August, with Jacksonville having the highest foreclosure rate of any metro area in the entire country, and Lakeland, Miami, and Ocala also among the top metro areas with high foreclosure rates as well. In addition, according to the Federal Housing Finance Agency, the recession will also cause Fannie Mae and Freddie Mac loan losses more than $4 billion, which will inevitably be passed onto consumers.