That’s where Noah Rosenfarb, CPA, managing director of Freedom Divorce Advisors of Short Hills, NJ, comes in. His firm has developed many relationships with bankers who can help his clients refinance their existing mortgage if they decide they want to stay in their houses. And late last year he founded a company that provides short-term financing during divorce proceedings to help women pay their living expenses while the divorce is being finalized.

High net worth divorcing women usually eventually have access to assets that will repay these loans and may in fact receive a better settlement because they will have the resources to pay for top attorneys and experts to bolster their case for alimony and a fair division of assets, he continues.

Mortgage financing help

"I have a relationship with a team of mortgage bankers whose focus is on helping the same group of people who I work with, divorcing women,” he says. “As a result, we are able to help the attorneys that work with these divorcing women to structure the support and divorce agreements properly to make sure that these women can qualify for a new mortgage.”

In some cases, a woman can’t qualify. If that’s the case, he works with the attorney to see if the support agreement can be restructured so that the woman can qualify for a mortgage. But if not “it’s best to know as soon as possible so she can make other plans, including selling the house,” he continues.

Selling the house also means figuring out where to live after the sale, which usually involves decisions for kids in terms of schools and activities. The size, location, price and ongoing expenses involved in the new house are key considerations when putting together a post-divorce budget.

And just because a divorcing woman can qualify for a mortgage to keep her house doesn’t mean that is necessarily the best option, Rosenfarb believes. That’s because even if she can afford the mortgage payment, that is only the first baseline cost. Taxes, insurance, utilities, maintenance and other costs have to fit within the post-divorce budget, he adds.

Divorce financing assistance

Late last year Rosenfarb founded a new company, Freedom Legal Finance. His motivation in starting this company was to help divorcing women with their financial needs during the divorce process in four key areas:

·         Retaining legal representation

·         Hiring expert services

·         Protecting credit scores

·         Maintaining lifestyles

Because most of the clients he serves are women who have been stay-at-home mothers who are married to executives, business owners and other high net worth men, they need funds to pay for top attorneys and experts as well as money to maintain their lifestyle on an ongoing basis while preserving their credit scores and credit reports.

“Many women are in a position where they want to get divorced, but they are concerned about accessing the capital and income from their spouse and their joint accounts, that they potentially will receive when the divorce is final,” Rosenfarb notes. “But to get those funds, they might have to file a motion in court or wait for their spouse to pay their legal fees or fees for accounting and other experts. So we come in and provide this temporary funding for them.”

The funds can pay for any expenses related to the divorce, including maintenance during the period of separation, fees for experts such as accountants and financial planners as well as expenses related to child custody, according to Rosenfarb. Custody experts might include psychologists, child psychologists and guardians ad litem. A guardian ad litem is a court appointed advocate for a child or children in a custody dispute.

If the divorcing woman has had to go into debt during or just before separation, the financing company can assist with those costs. “If you’ve gotten behind on your mortgage payment, or your credit card payments or your car lease, we can help with those expenses,” he says. “And that helps preserve the credit score and keep the credit report in good shape, which is critical in the post-divorce period.”

Because many divorcing women don’t have access to the financial information they need to qualify for loans, including the type of assistance that Freedom Legal Finance offers, the qualification process is a bit different. Rosenfarb gets permission to obtain an IRS Transcript Report that provides information about their income and assets with their spouse and to get an individual credit report.

Once that information is in hand, the company will either approve or decline the loan. Initially, it is offering loans in New York, New Jersey and Florida, but hopes to expand the business to other states in the near future, according to Rosenfarb.

Because there aren’t many other companies operating in this niche, he believes that there’s a lot of opportunity for financing these types of costs, both for his own clients and divorcing women working with other financial advisors and those without financial advisors.