Hermiz Law warns mortgage lock-in is complicating divorce home splits

Hermiz Law has published new guidance for Michigan couples who cannot afford to sell or refinance the marital home as elevated mortgage rates reshape divorce property division. The firm says the rate gap is pushing more spouses toward buyouts, deferred sales and shared ownership arrangements in Oakland, Wayne and Macomb counties.

Why it matters: - Elevated mortgage rates are making it harder for divorcing homeowners to divide the marital home without giving up a low-rate loan. - The problem is especially sharp in Metro Detroit, where home prices have risen and housing supply remains tight. - Divorce settlements now have to account for both property division and the mortgage contract, not just who gets the house.

What happened: - Hermiz Law, a divorce and family law firm based in Troy, Michigan, published guidance on how mortgage rate lock-in is affecting property division in divorces. - The guidance focuses on couples in Oakland, Wayne and Macomb counties who cannot afford to sell or refinance the marital home. - The analysis examines Michigan law, the mortgage lock-in effect and common options for keeping or dividing the home.

The details: - The guidance centers on the “lock-in effect,” where homeowners stay put because their current mortgage rate is far below today’s rate. - Federal Housing Finance Agency research found that for every 1 percentage point current rates exceed a homeowner’s existing rate, the likelihood of selling falls by 18.1%. - The same research estimates the effect blocked about 1.72 million home sales nationwide between mid-2022 and mid-2024. - The 30-year fixed mortgage averaged 2.96% in 2021, according to the Freddie Mac Primary Mortgage Market Survey. - The same loan averaged 6.52% as of June 11, 2026. - Existing-home sales fell to 4.09 million in 2023, the lowest level in 28 years, according to the National Association of Realtors. - In May 2026, median home sale prices reached $385,000 in Oakland County, $285,000 in Macomb County and $227,700 in Wayne County, according to RE/MAX of Southeastern Michigan. - The Michigan State Housing Development Authority has estimated the state’s housing shortage at roughly 119,000 units. - Michigan recorded 20,491 divorces in 2023, including 2,317 in Oakland County, 2,159 in Wayne County and 1,453 in Macomb County. - Michigan is an equitable-distribution state under MCL 552.19, so courts divide marital property to reach a fair result, not always an equal split. - Equity that builds in a marital home during the marriage is a marital asset subject to division. - When one spouse keeps the home, the usual structure is a buyout. - Removing a spouse from the deed is not the same as removing that spouse from the mortgage. - A judgment of divorce and a quitclaim deed can transfer ownership. - The mortgage remains a separate contract with the lender. - A full refinance is generally the only way to remove a departing spouse from mortgage liability. - Current rates can make refinancing unaffordable or hard to qualify for. - The guidance says the federal Garn-St. Germain Act of 1982 generally allows the spouse keeping the home to assume an existing low-rate mortgage instead of refinancing. - An assumption does not automatically release the other spouse from liability.

Between the lines: - The analysis shows how interest rates are now shaping divorce outcomes, not just housing decisions. - Couples may be forced to choose between keeping a favorable mortgage and achieving a clean financial break. - Deferred sales and shared ownership can preserve a low rate, but those setups increase the need for clear written agreements.

What's next: - Hermiz Law says the full guidance is available on the firm’s website. - The firm encourages Michigan residents to consult a licensed family law attorney about their specific circumstances. - More divorcing couples may explore deferred sales, buyouts or shared ownership if mortgage rates remain elevated.

The bottom line: - In Michigan divorces, the mortgage can matter as much as the deed when a low-rate loan is part of the marital home.