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In divorce agreements, it is common to see language such as:

“Spouse A shall refinance the mortgage within 90 days and remove Spouse B from liability.”

On paper, that sounds simple.

In practice, it often fails.

As mortgage professionals working alongside collaborative attorneys and financial neutrals, we regularly see well-intended refinance provisions unravel — not because someone refuses to cooperate, but because the refinance was never financially viable under lending guidelines.

The Most Common Reasons Divorce Refinances Fail

  1. Debt-to-Income Ratios Don’t Support the Loan

Post-divorce budgets differ dramatically from pre-divorce budgets.

Even if the payment appears affordable on a cash-flow worksheet, mortgage underwriting follows strict debt-to-income ratios that may produce a different result.

  1. Self-Employed Income Is Calculated Differently

This is one of the most misunderstood areas in divorce planning.

Attorneys and financial professionals often evaluate income based on gross business revenue or owner draws.

Mortgage underwriting does not.

For self-employed borrowers, we use:

  • Net income after expenses
  • Add-backs (when allowable under guidelines)
  • Two-year averages (in most cases)

This can significantly reduce qualifying income compared to what appears on a tax return summary or financial affidavit.

A refinance that seems feasible using gross income may not qualify when evaluated using underwriter-calculated net income.

  1. Support Income Is Not Yet Usable

For conventional and VA financing, lenders typically require:

  • A documented history of receipt (often six months)
  • Consistency
  • Three years of continuance from loan closing

If deadlines are set before those requirements are satisfied, the refinance may be structurally impossible.

  1. Equity and Reserve Requirements

Buyout structures increase loan balances.
Loan-to-value limits may restrict options.

Additionally, many programs require post-closing reserves. Asset division during divorce can unintentionally eliminate the liquidity required for approval.

The Collaborative Opportunity

Refinance provisions fail not because of bad intent — but because mortgage feasibility wasn’t analyzed early enough.

A pre-settlement underwriting review allows the team to:

  • Set realistic timelines
  • Structure viable buyouts
  • Identify alternative options
  • Avoid post-decree surprises

Case Study

We had a client that was getting ready to sign the divorce decree…it was a collaborative case.  The client sent the decree to me prior to signing.  Upon review we noticed that the total income would not support the refinance.   In this case the divorce client was also getting support payments for a total of 10 years.  We were not far off…the solution was to front end load some of the support payments and reduce the overall term of the payout.  The attorneys and the client reviewed the suggestion and were able to make the numbers work and the client was able to get the home refinanced and complete the divorce.

Mortgage strategy integrated early strengthens the durability of the final agreement.

About the Author

Dave Jamison is a divorce mortgage strategist and co-owner of Rainbow Mortgage Inc., an independent mortgage brokerage licensed in Minnesota, Florida, and North Dakota. With more than 26 years in residential lending—including 13 years as an underwriter for Fortune 500 mortgage institutions—Dave brings deep, practical expertise to complex divorce-related real estate matters.

What sets Dave apart is his underwriting foundation. Rather than approaching cases from a sales perspective, he evaluates them through the lens of how loans are actually approved—income calculations, debt ratios, reserve requirements, and documentation standards. This allows him to assess feasibility early in the divorce process, helping prevent refinance provisions that later fail and ensuring agreements align with real-world lending guidelines.

Dave and his wife, Gale, founded Rainbow Mortgage Inc. in 1999, initially serving borrowers with complex financial situations. In 2004, he began specializing in divorce mortgage planning, applying his expertise to support attorneys, mediators, and financial neutrals. Since then, he has spent more than two decades helping collaborative teams structure realistic refinance timelines, evaluate buyout options, and avoid post-decree mortgage breakdowns.

He is particularly skilled in analyzing self-employed income, support income, and multi-property scenarios—areas where legal and financial assumptions often diverge from underwriting standards. Known for his calm, direct, and non-adversarial approach, Dave provides clear, objective guidance that supports durable agreements.

David Jamison
Rainbow Mortgage, Inc.
E: dave@rainbowmortgageinc.com | Ph: 952-405-2090
www.RainbowMortgageInc.com

 

 

 

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People sometimes tell me they’ve heard that collaborative divorce works better for the higher income spouse. The idea is that the person with more money will always have more influence, more control, and more options. If you earn less than your spouse, it can feel risky to choose a process that depends on cooperation.

I understand why that fear exists. Money shapes how we move through life. It can affect your confidence in negotiations. It can make you wonder if the other person can simply wait you out until you accept less than what is fair.

In my work, I have seen that a carefully managed collaborative divorce can protect a lower income spouse in ways the court process often does not.

Why This Concern Feels Real
In many marriages, one person earns significantly more than the other. When the marriage ends, the higher earner may have more savings, more credit, or more financial stability. They may feel less urgency to resolve things quickly. The lower earner may feel pressure to settle just to get financial relief.

These are valid worries. They do not disappear automatically in a collaborative case. But collaborative divorce was designed to address them directly.

How Collaborative Divorce Addresses Power Imbalances
The process starts with full financial transparency. Both spouses share all the information about income, expenses, assets, and debts. There is no hiding documents, no drawn-out discovery requests, and no costly legal fights just to get basic facts.

A neutral financial professional is part of the team. They work for both spouses and explain financial details in plain language. This means each person understands what different settlement options will mean for their future.

Collaborative teams can make interim financial agreements early on. If one spouse needs support for housing or daily expenses during the process, the team can create an agreement right away instead of waiting for a court hearing.

Because communication is at the heart of collaborative work, there may often be coaches involved. These professionals help keep discussions respectful and balanced. They make sure one voice does not dominate the conversation.

Why Litigating Attorneys May See This Differently
Attorneys who primarily work in litigation sometimes see collaborative divorce through a different lens. In court, the higher income spouse can be ordered to produce documents, attend hearings, and even pay temporary support early in the case. Judges have authority to make rulings and set deadlines. To a litigator, those built-in powers of the court can feel like stronger protection for the lower income spouse.

From that perspective, collaborative divorce may seem risky because there is no judge to issue immediate orders. Litigators worry that without the authority of the court, a higher income spouse could slow things down or refuse to cooperate.

These concerns are not unfounded. In a collaborative case, if one spouse refuses to participate in good faith, the process can break down. That is why collaborative professionals screen cases carefully. If there are signs that one person will withhold information or use the process to stall, collaborative may not be the right fit.

When Collaborative Practice Works Better
Using a collaborative process can give the lower income spouse more control over their future than litigation. Court processes can be slow and expensive. The higher income spouse can afford to keep paying legal fees, while the lower income spouse may feel pressured to accept a deal to stop the financial bleeding.

In Collaborative, both spouses commit to full disclosure, respectful communication, and problem-solving. The team addresses immediate needs quickly so that neither person is left in crisis. Instead of spending time and money on court battles, the focus stays on building an agreement that works for both people.

Collaborative divorce is not fair just because of the name. Fairness comes from the professionals involved and their willingness to slow down, explain every option, and make sure each person understands what they are agreeing to. The team’s role is to keep the process balanced so that neither income level decides the outcome.

Litigating attorneys and collaborative attorneys sometimes see fairness through different frameworks. Both want to protect their clients. Both see situations where the other process might fail. What matters most is choosing the process — and the professionals — who will make sure your needs are met and your voice is heard.

For a lower income spouse, collaborative practice can be a place to get stability, clarity, and a say in what comes next. With the right team and safeguards, it can be a path to a fair resolution without the costs and strain of a courtroom battle.

About the Author

Angela is a former President and board member of the Minnesota Collaborative Law Institute. She has a solo practice where she focuses primarily on collaborative law and out-of-court settlement processes.  Through her work, she aims to empower individuals to make informed decisions while reducing conflict, cost, and emotional stress.  She helps clients navigate complex transitions with clarity and compassion.

Angela is a former President and board member of the Minnesota Collaborative Law Institute. She has a solo practice where she focuses primarily on collaborative law and out-of-court settlement processes.  Through her work, she aims to empower individuals to make informed decisions while reducing conflict, cost, and emotional stress.  She helps clients navigate complex transitions with clarity and compassion.

Angela Heart, Family Law Attorney
Heart Law, LLC
E: Angela@heartlaw.net | Ph: 651-337-1333
Website: https://www.heartlaw.net/

 

 

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Judith Wallerstein, in her ground-breaking 25-year study of divorcing parents and their children, was perhaps the first social science researcher to notice it.   The injury to self which can happen in divorce is much deeper than what people were thinking throughout the 1970s.  It can happen on the deepest level of the human psyche.

            What she noted is that the divorce for most of her study population was a challenge on three levels:   1) to the world-view her couples had always assumed (in a sense, a ‘crisis of faith’); 2) to who they thought they were as human beings (a ‘crisis of identity’), and 3) even to the deepest part of their psyche – the central brain which is connected to adequate sleep, appetite, situational awareness (avoiding traffic accidents) and the immune system.   As she sometimes said, “It’s as if the body itself perceives the experience as an attack on its ability to survive”.

            And so, it’s no wonder that couples sometimes ask themselves as they start down the path of divorce:  “How much is this going to change my life?   Who will I be on the other side of this?”

            Fear of the unknown can sometimes feel worse than dealing with the day to day frustrations of a dysfunctional relationship.   At least the dysfunction is a known quantity – which can sometimes feel safer.

            But it’s possible to reinforce the strongest sense of self coming out of a divorce process, especially one which is Collaborative and focused on the needs of the family system as a whole.

            Here are three good ideas for making that happen:

  1. Self care.   This may seem obvious, but even when life is going well it can be hard to achieve.  Good exercise, good food, and good sleep need to be a special focus when going through a divorce process.   No one wants to be at their worst or weakest in making decisions which can shape the rest of their lives, or their children’s lives.
  2. Re-engaging with your values.  The personal strength that comes from self respect is drawn from the integrity of acting consistently with your deepest values.   It brings confidence and clear thought.  It may be as simple as reconnecting with a good faith community in your area.   It may mean finding a good therapist whose listening ear helps you to feel stronger and not weaker – someone who helps you to hear your own voice clearly.   It can also mean reconnecting with caring friends and family members who help you to feel stronger and more confident (not more fearful!).   Take the time to think about making this happen for yourself.
  3. Vision planning.   This is so difficult to do when we are stuck in a “fear place”.  But the truth is, if you can’t imagine a new and better future for yourself, who is going to do it for you?   It’s important to give yourself time to carve out some moments here and there where you give yourself permission to dream.   Ask yourself:   Where have I been before that made this easier?   Who was I with at the time?  What was I listening to?

So much good comes from finding self-respect.  Honoring your entire life – physical, mental, spiritual – it’s a critical piece of putting your feet forward, every step of the way.

Judy Johnson
Collaborative Team Divorce Attorney
Judith _ h _ johnson @ Hotmail.com | 952-405-2015
collaborativedivorceminnesota.com

With more than 47 years in private practice, Ms. Johnson has built a respected career dedicated to helping families navigate legal transitions with clarity, dignity, and care.

She began her career in a mid-sized Minneapolis law firm where she was immersed in a broad general practice, gaining experience in real estate, civil rights, professional license defense, personal injury, juvenile and family court, criminal law, and probate. This diverse foundation shaped her comprehensive understanding of how legal issues intersect—ultimately guiding her toward a focus on family law and alternative dispute resolution.

After many years practicing contested litigation, Ms. Johnson transitioned in 2005 to Collaborative Team Divorce. This shift reflected her growing conviction that families benefit most from a “family systems” approach—one that prioritizes healthy adjustment for parents and children as they transition into two homes. Since then, she has devoted her work to collaborative practice, helping clients reach thoughtful, durable agreements outside of court. She remains of counsel with Speeter and Johnson in downtown Minneapolis.

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Those of us who practice Collaborative Team Divorce sometimes get asked the question:   “What if my spouse isn’t willing or able to show me respect?   Why then should I respect them?   What’s the value of that?”

There is value to one partner offering respect as a deliberate choice of habit, on several levels:

  1. Business level trust is all that’s needed to support a Collaborative solution. Collaborative Practitioners are often taught to avoid the word “fair” as a relative term when it comes to solutions for couples and families facing divorce, and instead focus on the term “acceptable”.   All that is needed is a solution that is acceptable to each partner – so long as it meets the needs of both partners and the children, after taking all needs into consideration as well as potential ‘legal rights’.   Once a solution has the effect of a court order (meaning, a court-entered Judgment), that is a measure of safety and enforceability for the agreements which have been made.  The kind of intimate-level trust that was needed to support the marriage is not needed.
  2. “Trust but verify” is the basis for acceptable solutions. Good quality information is needed to craft the foundation for an acceptable solution.   Collaborative Financial Specialists are the professionals whose job it is to collect all the financial information which is needed, and to make it available to both partners and the Collaborative Team, including each spouse’s attorney.  The reason many professionals choose to practice Collaborative Team Divorce is that they get access to financial information more quickly, and more completely, than what is often uncovered in the back-and-forth, ‘cat and mouse’ strategies of formal legal discovery.   This is because Collaborative Team Practice is based upon mutual respect and staying away from tactics that trigger human defense mechanisms.   In addition, Collaborative Practice can use methods which are similar to contested litigation practice, such as exchanging Release of Information Forms directly to employers and plan providers, to make sure the data is all genuine – in the event there is any question about that.   If such steps are not needed, they don’t recommend the extra expense to use them.
  3. Children get the idea. In her 25-year study, Judith Wallerstein was sometimes quoted as reminding professionals and couples that children attach to both parents.   If even one parent is healthy enough to recognize and support the connection children have to both parents, that home is a safer and happier place for children to be.   Chances are, the healthier parent will over time gain more trust and a stronger connection to the children – they are drawn to the healthier parent.   This can be demonstrated simply, by asking the children such questions as:   “Did you know that your (X parent) plans to take you to their family’s cabin with your cousins this weekend?   Isn’t that great?   You know, your (X parent) and I may have had our problems, but they love you so much!”  This helps to make transitions between homes more successful, and the children know that – at least in the home of the healthier parent – they can be “whole people”, safe and connected to both parents.   They don’t have to deny half of who they are when they come home from school in the evening, and can look forward to feeling healthy and whole in the home of the healthier parent.  It makes a difference.

So if any part of you is thinking that acting like the only grown-up in a divorce process is a waste – think again.  Find a good process for your divorce proceeding, get to a solid “acceptable” agreement, and get that agreement entered by the Court as a judgment.   Then, focus on the future with the realization that the agreements made are enforceable, and the home you provide your children will be what they remember.

Judy Johnson
Collaborative Team Divorce Attorney
Judith _ h _ johnson @ Hotmail.com | 952-405-2015
collaborativedivorceminnesota.com

With more than 47 years in private practice, Ms. Johnson has built a respected career dedicated to helping families navigate legal transitions with clarity, dignity, and care.

She began her career in a mid-sized Minneapolis law firm where she was immersed in a broad general practice, gaining experience in real estate, civil rights, professional license defense, personal injury, juvenile and family court, criminal law, and probate. This diverse foundation shaped her comprehensive understanding of how legal issues intersect—ultimately guiding her toward a focus on family law and alternative dispute resolution.

After many years practicing contested litigation, Ms. Johnson transitioned in 2005 to Collaborative Team Divorce. This shift reflected her growing conviction that families benefit most from a “family systems” approach—one that prioritizes healthy adjustment for parents and children as they transition into two homes. Since then, she has devoted her work to collaborative practice, helping clients reach thoughtful, durable agreements outside of court. She remains of counsel with Speeter and Johnson in downtown Minneapolis.

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What happens to couples who threaten each other when it comes to divorce?

It’s an automatic response, which happens on a physiological level first.   What some brain researchers refer to as the “fight, flight or freeze” phenomenon is an automatic survival mechanism that surfaces in response to perceived danger.   The amygdala in the center of the brain detects threats and signals, which trigger a cascade of hormones like adrenaline and cortisol to prepare the body to fight back – or flee, or freeze or even mimic a “fawn” – blending quietly into camouflage wherever a hiding place can be found.   Heart rate and breathing speed up, and muscles tense to respond with immediate action.

As divorce researcher Judith Wallerstein once noted, stress like that over a short period of time is one thing; stress like that over a period of many months or years (which contested court divorces can often last) is another thing entirely – it becomes something which can cause permanent damage to both parents and children.

What else happens when these mechanisms are triggered?   Rational thought – the type of careful thought which could be used by couples to craft a successful future for the family – cannot be accessed because it has been blocked.

Human beings are more than machines, and we can’t control our automatic triggers.   But we can be smart enough to over-ride them.

How can couples manage those physiological responses and move forward into a hopeful and happy future?

The solution is an easy answer, but it takes hard work and the development of habits which will help lay a communication foundation for the future, as well as help children to last and thrive for a lifetime.  Developing habits of respect for one another take practice, and here is a short list that can be practiced by anyone:

  1. Don’t jump to conclusions.   Collaborative Attorneys, and Financial and Family Specialists see this so often.   Couples assume they know what each other will say, before the chance to say it has surfaced, or the reasoning behind it has been explained.  Each side needs the chance to be heard, and to say what won’t work for them – but that has to be followed up by suggestions that could work for everyone.
  2. Use descending tone.   In a Collaborative Divorce, it’s so important for a divorcing couple to each find their individual “voice” in speaking to their own needs, and the needs of their children.  When couples speak up for themselves, it’s always more effective than lawyers blathering on about what they believe their clients think and need.  But couples’ voices do not have to shout to be effective.  Statements can be simple, direct, pointed – but the energy behind the voice doesn’t need to wear anyone out or down.  And sometimes adding a simple “we” or “us” to the statement can become more effective – “it seems to me like we’ve always gotten stuck on that, but I really don’t want us to go there anymore”.
  3. Stay curious.   This is the hardest habit to develop when anyone is facing danger – and in divorce the dangers can be losing assets, getting stuck with mountains of debt from the cost of the process, and spending meaningful time with children.  Big stuff – huge, in fact.  But it is possible to keep an open mind.   The internal discussion can move from “I don’t see how this can ever work” to “I wonder if maybe we could get that solved” – that shift invites positive solutions into the discussion and makes all the difference in the world.

If you are contemplating divorce, can you develop habits of respect for one another?   It’s not easy, and in fact such habits tend to fly in the face of automatic physical impulses.   But in Collaborative Practice we see couples who do it, and do it well.   We want to see couples and families not only survive the process – we want to see them and their children thrive.  And we want to see them craft solutions created out of their own authentic voice.

Consider a start by changing your negative self-talk.   Ask yourself, “could we maybe create a better future for ourselves?”   That potential future won’t happen without staying curious and developing the habits needed to get there.

Judy Johnson
Collaborative Team Divorce Attorney
Judith _ h _ johnson @ Hotmail.com | 952-405-2015
collaborativedivorceminnesota.com

With more than 47 years in private practice, Ms. Johnson has built a respected career dedicated to helping families navigate legal transitions with clarity, dignity, and care.

She began her career in a mid-sized Minneapolis law firm where she was immersed in a broad general practice, gaining experience in real estate, civil rights, professional license defense, personal injury, juvenile and family court, criminal law, and probate. This diverse foundation shaped her comprehensive understanding of how legal issues intersect—ultimately guiding her toward a focus on family law and alternative dispute resolution.

After many years practicing contested litigation, Ms. Johnson transitioned in 2005 to Collaborative Team Divorce. This shift reflected her growing conviction that families benefit most from a “family systems” approach—one that prioritizes healthy adjustment for parents and children as they transition into two homes. Since then, she has devoted her work to collaborative practice, helping clients reach thoughtful, durable agreements outside of court. She remains of counsel with Speeter and Johnson in downtown Minneapolis.

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serenity-prayerMany recovering alcoholics claim that the wisdom of The Serenity Prayer saved their life.  I have found in my practice that the wisdom contained in this simple prayer can also serve as an essential guide for helping people through a difficult divorce. The Serenity Prayer, which asks for the serenity to accept the things you cannot change; the power to change the things you can and the wisdom to know the difference, provides an important framework for dealing with almost all difficult situations. Divorce almost always creates unfortunate realities that lie outside our control; the fact that you will not see your children on certain days; the reality that your family income will now be spread through two homes; and many other stubborn truths.  These realities cannot be changed and, in the end, the ability to find acceptance and serenity is a worthy goal. Divorce also requires people to summon courage to address daunting challenges; finding ways to co-parent when you are angry or scared; learning to manage new financial challenges; or trying to communicate effectively in painful situations.  People who find this courage in divorce are much more likely to achieve their goals. Finally, gaining wisdom about which areas need acceptance and which challenges require us to act courageously is often the ultimate challenge in a divorce.  While some of this wisdom may come from divorce sources, some of the wisdom can be gathered by finding people you can trust to help you focus  your time and energy on your most important goals. One thing I like about the Collaborative Divorce Process  is the focus on giving people the tools they need to truly help themselves.  The first step in the process is generally to help clients identify their highest goals.  As the process evolves divorcing couples are counseled to accept the things beyond their control so that they can focus their attention and limited resources on the things that truly matter.  Clients who truly commit themselves to these principles can move from chaos to a new sense of order; sometimes even a deep sense of serenity.  In any case,  I have found that giving people the opportunity to gain wisdom about when to  “let go” and when to work for change is the most important part of a divorce attorney’s job.