Divorce Mortgage Strategies: Joe Dillon on Real Property and Complex Finances

Host: Jody Bruns, Founder of Divorce Lending Association, Creator of CDLP and REMS Certifications
Guest: Joe Dillon, Equitable Mediation Services

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Jody: Welcome to the Divorce Mortgage Strategies Podcast, where legal, financial, and housing professionals converge to support better outcomes for divorcing clients. I’m your host, Jody Bruns, founder of the Divorce Lending Association and creator of the CDLP and REMS certifications.

Today we’re diving into a topic that every divorce professional needs to understand: mediation that works, especially when real property and complex finances are involved. My guest is Joe Dillon, professional divorce mediator and co-founder of equitablemediation.com, one of the leading online divorce mediation services serving clients nationwide.

Joe brings a rare and powerful perspective. He combines strategic thinking, financial acumen, and empathy-driven conflict resolution to help couples avoid the courtroom and reach clear, lasting agreements, especially when it comes to decisions related to the home, support, and mortgages.

If you’re a divorce attorney, financial neutral, real estate, or mortgage professional, this episode is going to help you understand why mediation needs to be a bigger part of the collaborative toolbox and how to avoid the all-too-common settlement pitfalls that lead to post-divorce litigation or financial instability. Joe, welcome to the show.

Joe: Thanks for having me. Appreciate it.

Jody: I always like starting off by letting our audience know about your specific background, your training in mediation, and where your professional background comes from because as we know, not everybody who’s a mediator is also an attorney. Tell us about your journey.

Joe: That’s a great question. I’m a non-attorney mediator. I have a master’s degree in finance and my background is finance and negotiation. In my professional career, I was actually a negotiator. I worked for publishing companies and other large companies, helping negotiate sales contracts and financial contracts. I’d be working with salespeople, customers, and legal departments, and I found myself as the liaison between all three of them. In a way, I was mediating.

If you know anything about salespeople, all they care about is getting the sale because that’s when they get their commission. If you know anything about legal departments, they don’t want to give away a single thing – “We will not change that contract.” The poor customer is sitting there saying, “I want to give you millions of dollars. Could you please take my money? You all just need to figure this out internally.”

I found myself in that role as a director in these companies, trying to balance everybody’s needs. Through a series of events – downsizing and things – I was having lunch with my mother-in-law and she said, “I think you should be a mediator. I have a friend who does this and your background would be good for it.”

Not all mother-in-laws are bad! I love my mother-in-law. I hope she’s listening. But I said, “This is interesting. What could I do with a finance and negotiation background?” Divorce mediation.

As a personal aside, my parents litigated their divorce. I’m the classic “burn it to the ground” story. My father was so mad at my mother that I never saw him again after the last time I saw him in the hallway of a courtroom. I sat in the back of the courthouse – all that stuff that everybody says “Oh, that never happens.” It happens. It happened to me.

I combined that personal experience with my professional experience to help people avoid what happened to me. That’s my journey and how I got to where I am today.

Jody: Our journey is very similar. I have a business degree and was in construction lending for years, handling all the draws on the construction side. Then my husband and I – my ex-husband now – moved to Colorado and I started working more in origination. Then we went through a not-so-nice divorce. I am you, but I’m the parent.

When I was back in Chicago working, it was actually a law firm who said, “We love your approach to working with divorcing clients and the education. You should write a certification program.” I think you and I probably did some of the same training if your Harvard experience was their program on negotiation.

I’ve really taught our members at the Divorce Lending Association that you are mediating. You are literally mediating and presenting strategies and solutions to the divorce team and your clients. We’ve incorporated a lot of that into our curriculum because I don’t want any of our members presenting options and strategies as a traditional loan officer so they’re actually more disruptive to the process.

I love that more professional mediators are not attorneys. I think divorcing homeowners specifically appreciate that because there’s so much more to mediating the house than legalities. As a trained mediator, you know how to balance those emotions and make sure everyone involved is moving forward instead of kicking it back and having to renegotiate.

Joe: As we would say, it’s interest-based negotiation versus positional-based. The house is an emotional aspect. We all think of a house as a piece of property, but it’s where your kid took their first steps or where you took photos of the first day of school or prom. All the memories of Christmas or Hanukkah or whatever you celebrate, unwrapping gifts or having family meals. Sure, it’s got equity and value on a balance sheet, but it is far more than that. When you get emotional equity, boy oh boy, it is.

Jody: You have to see which way the scale tilts – to the asset or the emotional – which is more valuable to the person who wants to keep the home. How do you personally handle that discussion with divorcing clients? What do you think is the most common hurdle when they’re anchoring, digging in their heels and saying, “Nope, you’re not keeping the house” or “I want my 50% right now”?

Joe: Most of the clients we deal with have kids, minor children. When they do, it’s not an easy conversation, but it’s easier. It goes back to interest-based negotiation. I say to them, “Look, do you have an interest in keeping your kids in the house?” Typically parents will say, “Yeah, we don’t want to disrupt them. They have friends in the neighborhood and they like their school districts.” I’m like, “Great. So let’s find a way to do that.”

You and I both know when it comes to the finances of a house, even the cost of ownership – this is exactly what happened to my mom. My dad was a very handy guy – a builder, construction, architect. He could fix things, build things. Whenever something went wrong in our house, dad would be out there putting up a new fence or pouring a new sidewalk or replacing the driveway or roof. These are not things that normal people do.

When my mom tried to buy my dad out of the house, well, guess what? Those are all now costs she’s going to need to incur to own that house. When we talk about child support guidelines or alimony payments or money in savings accounts and we look at people’s budgets, we say, “Look, your homeownership costs are going to go up and these guideline numbers we’re talking about are not nearly enough to cover keeping the kids in the house.”

So you told me you’re interested in keeping them in the house. Let’s find a way to do that. That might mean deferring your share of the equity. It might mean higher support payments. It might mean one of you stays in the house and the other stays with a friend and has their parenting time via nesting in the former marital residence. We try to bring up creative options to get people thinking outside that box of “I get half of what it’s worth and I want you to pay me now.”

Jody: I’ve been involved in a lot of mediations around this topic and sometimes I’ve unfortunately witnessed mediators who in my opinion are not prepared for that type of conversation. I once had a client who adamantly was not moving – she was keeping the house. The divorce was disruptive enough, not doing that to the boys.

I said, “Okay, I can qualify you to refinance this mortgage. You are going to be house poor.” She started telling me how her boys played competitive baseball. Mine played competitive baseball – it’s not cheap. Having this conversation with her, I said, “Kids are resilient. They will be happy where they see their parents happy. Would you rather keep them in the same house and then say, ‘I’m sorry, honey. I can’t afford for you to go on that baseball tournament next weekend to Omaha because I have to make the mortgage payment’?”

I don’t regularly see it handled in a professional manner that addresses the emotion and the financial aspect. How do you work with your clients to pull back the blinders and look at it from a pragmatic standpoint?

Joe: A phrase that I’ve coined that I really use over and over is “do the discovery before the deciding.” People come in and say, “We got it all figured out.” We’ll see how this goes. At the end of the day, you say to folks, “Listen, we’re going to start off with information gathering. We’re not talking about what we’re doing. We’re not deciding on anything. We’re not even digging into the issues. I just want you to go through our proprietary process.”

One of those pieces is a thorough budgeting exercise. A lot of people don’t budget – we just spend money. Tonight, when you’re bored, go online, log into your online banking account, your credit card, and count up how many auto debits hit your credit card every month. Netflix, Spotify, Apple, iTunes, whatever it is. They’ll come back with 20, 30, 40, and you’re like, “Yeah, because we stopped paying for things. We just get charged for things now. We forget how much things cost.”

By forcing them to fill out these really detailed 100-different-category budget workbooks and dig in deep – breaking them out into housing costs, transportation, personal, entertainment – it really gets them digging. Then we set it aside completely.

When we get in the thick of the conversation, we say, “Okay, this sounds like what you guys want to do is keep the house. We’ve talked about what some of the support numbers look like. Let’s go back to those budgets now and see if it’s realistic.”

Usually there’s a pretty significant disconnect. Usually the amount they’ve talked about for support and the money somebody’s going to have to pay and what their mortgage is going to go up – because if they’re going to take cash out of the house, your mortgage payment isn’t going to be the same as it currently is.

We say, “Okay, guys, knowing what we know now about the finances and how this might not be realistic, does that change your thought? Does that change whether you want to keep this house for the emotional reasons?” If it’s still no, we still want to keep it because we’re really emotionally tied to it, here’s what it’s going to take from both of you.

We separate that. A lot of people want to come right in with their numbers and say, “Look, we put this all together and this is what we’re going to do and we just want you to look at it.” It’s like, “No, no, no. We’ll get there eventually, but we want to put that aside.” Separate the discovery from the deciding.

Jody: When do you typically bring in a mortgage professional such as a certified divorce lending professional, and how much do you know about a CDLP?

Joe: I bring somebody in like that very early in the process. My process goes like this – I always start with people with kids because most of our clients have minor children. I always start with the parenting plan, and maybe I’ll reveal a little bit of my secret: in my experience, if there’s one topic people are going to agree on or have less disagreement about, it’s the parenting plan.

By starting with that in a mediated divorce, you get to say to people, “Hey look, you guys are doing great. Good job. We reached an agreement.” We’re professionals, but part of it is encouraging the parties to remain engaged in the mediation process.

The next thing I do is the budgeting process. Before we even get into child support, alimony, property division – which usually for me are way down, weeks or months away – I now look at the budget and say, “Well, okay, here’s your mortgage payment.” I ask them to break it out into principal and interest, homeowners, and taxes.

They’re like, “Why do I have to do that?” Because your taxes are going to go up, your homeowners are going to go up if you refi. But it’s your principal and interest that we’re really worried about. We need to understand exactly how much your mortgage payment is going to go up.

If they tell us early on, “One of us has an inkling to keep a house,” that’s when I say, “Listen, before you even go through the rest of this process, because we don’t want to come to an agreement, and then you’re done with me and you’re in the filing process and then you go to a mortgage professional and it’s like, ‘Oh, no, you don’t qualify.'” We do it right after the first session.

Jody: That’s awesome. Because you got to know that stuff.

Joe: You got to work with somebody who’s able to work with you. I’m self-employed. My wife and I work together in our own business. Every time we apply for a mortgage, you go through the whole laundry list of documents you need. We’re not like other people – we’re self-employed. We don’t pay ourselves a paycheck regularly, our expenses are wrapped up in our business.

A divorced person or divorcing person, even if they have a job, even if they have a salary, they are also a non-traditional person in my opinion. They need a professional who can say to them, “Look, we’re going to have to work together to advise you on how you will be able to qualify.” It’s not just going to Bank of America, giving them your pay stubs, and they go, “Awesome, you qualify for a million dollars.” That’s not divorced people.

Working with someone who is certified in this kind of lending and who is a lending professional, not just somebody who decided “I’m going to do this because I think I can make good money” – that’s critically important so the person isn’t disappointed and our whole negotiations aren’t wasted.

Jody: That is truly the value of working with a certified divorce lending professional. As you know, coming from the finance world and blending it into divorce, it’s a whole other world. As a CDLP, if we’re coming into mediation or collaborative, whatever the process, we are trained to see the red flags because what’s available as a legal option may not be available as a mortgage option.

If we are looking for income streams to make sure you can qualify on your own, let’s make sure the language is there, or how can we work with your finance team to make sure we are not impeding on your estate planning or financial planning because we all want to preserve our clients’ assets. Sometimes there has to be flexibility there.

Traditional loan officers don’t think about anything like that. Their tax filing status is going to change – they’re going to go from this nice, sweet, standard deduction to either single or head of household. And it does have an effect.

We have this amazing report called the Divorce Mortgage Planning Real Property Report where we dig into the details of the property – everything the mediator, the attorneys, whomever needs to know about the property. We see things differently. You guys might be looking at titling from an ownership perspective; we’re looking at it to see how that can affect how much equity we can even access in the house.

On our page, if we’re running equity buyout scenarios, we have a little dropdown for what your new tax filing status is going to be. Sometimes, believe it or not, going from a three and a quarter percent interest rate to five and a half, when you take into consideration the after-tax cost of funds, sometimes it’s a wash.

Joe: People are so tied to interest rates. Some people say, “I’m not getting rid of this three and a quarter percent interest rate. I’m not doing it.” When you look at your tax status change and the effect on your standard deduction, there’s a cost sometimes to keeping that three and a quarter percent interest rate. You’re either going to refinance and pay a little bit more in interest, or you’re going to pay Uncle Sam at the end of the year because you don’t get that big deduction. When you show them the financial aspect of it, it’s a game changer.

People don’t think that. They’re so quote-unquote “married to the rate” that they want to divorce the rate, not just their spouse.

Jody: That’s so funny you said that because I always tell people in session, “You marry a house, you date a rate.”

Joe: When my mom bought the house out from my dad in the mid-80s, she thought 11% was a good interest rate, and it was at the time. Eleven was down from like 18% or whatever it was.

There’s also the concept of utility. You’re paying this interest, but let’s say you were to pay that to rent – you’re not going to get any equity back out of that. I happen to live in California now, and the real estate is nuts out here, but it grows by leaps and bounds. Even if you took on a higher interest rate, you could probably say with some certainty that the value of your house would double in five years. That’s not a guarantee, but out here it’s kind of close.

If I pay more in interest, but the value of my asset is going to skyrocket, maybe if I can swing that monthly payment, I could do that.

Another one I wanted to mention – I ask people to prepare a balance sheet and get a value on your house. Get an appraisal, a real estate agent, combine them, average them. I try to explain to people that if you go on realtor.com it may be inflated, so go for a professional, pay the $300, and get the appraisal.

Then they get the balance off their mortgage statement and I’m like, “Heads up, that’s not exactly what the payoff amount of your mortgage is.” You need to know this because you’ve got prepays and taxes and escrow and all that. You really need somebody, and unfortunately it needs to be someone other than me, because I want to maintain my status as neutral nice guy.

I want to send them off to a professional and say, let the professional explain to them that your buyout isn’t going to be value minus equity. There are other fees and costs associated with this. I don’t claim to understand that because I’m not a mortgage professional like you are. I know enough to be able to refer. That’s the key thing. I have a master’s in finance, but guess what? I still pay a man to do my taxes because I’m not a CPA.

Jody: Even if one spouse wants to keep the house and somebody else says, “Well, I want to go buy a house,” there are things we can help with in the language of the agreements to make sure that going forward, you won’t get hit with this mortgage payment if you’re still on the mortgage. It does take a collaborative effort from all the professionals.

One of my comebacks to people when they say, “Well, I don’t want to pay this kind of interest rate. I’m going to rent,” I’m like, “What’s the interest rate on rent?” They ask what I mean. I go, “The interest rate on renting is 100%.” One hundred percent versus 7%.

It’s all about being informed. They will be educated in ways they never thought they would have to be educated in the past. Divorce changes everything – the way you socialize with your friends, the way you qualify for a mortgage. It’s not as simple as it was previously.

Tell us more about your practice and how you offer services, because I saw on your website you have an online mediation program.

Joe: This is a little background on us. When the pandemic hit and the world shut down, a lot of mediators scrambled to move their practice online. We’ve been mediating online since 2011, and we’ve come to find out that we actually may be the first or one of the first people to do that.

It started out as a happy accident. We got a call from a gentleman whose wife was agoraphobic and she wouldn’t leave the house. He wanted to mediate and said, “Is there anything you can do?” I thought, “Well, no problem.” It just so happened he lived 15 minutes from me when I was living in New Jersey.

He said, “Actually, my wife is also obsessive-compulsive and she’s afraid of germs, so she won’t let you in the house.” I said, “Okay, I’m not really sure what we can do.” I wandered into my partner Cheryl’s – my wife’s – office and said, “Here’s what happened. What do you think?”

She said, “You know, there’s this technology called WebEx, and you might want to offer it via telephone and screen sharing.” There were no cameras – we didn’t have the bandwidth in 2011 to push video like this. I reached back out and said, “You want to give this a shot?”

He said yes, and we scrambled and made up PowerPoint slides and Excel spreadsheets and shared our screen. It was awkward, it was clunky, but it worked. We thought about it and started offering it. Over the years, more and more people took us up on it until finally when the pandemic hit, it just became the way to do it.

At the time of the pandemic, we had been mediating online for nine years already. Now that’s how we mediate exclusively online. Here we are, 14 years later. You have to have a process and structure. There’s a lot you need to do to be an online mediator because there are corners you have to peek around and landmines you got to avoid.

We’ve been doing this such a long time now, it’s such a natural part of our process that I wouldn’t even know what to do if I was sitting in a room across from two people.

Jody: Do you mediate nationwide or just in your specific locations?

Joe: We mediate in six states. Washington, California, Illinois, New York, New Jersey, and Pennsylvania. That follows the trajectory of where my wife and I have lived and moved across the country. They’re also mediation-friendly states, and we enjoy practicing there.

We have practiced in 13 states in the US. We have also done divorces in Canada, France, Thailand, Japan, Hong Kong. People find us and what we tell them is, “Look, we will help you negotiate the framework of your agreement, but then you’ll need a legal professional in France, for example, to be able to do this.” Mediation is not as well-known in some of these places, but people just wanted to have conversations as parents or conversations about their property.

We’ve been really blessed and fortunate that people have found us worldwide, but we know those six states very well. We know how divorce works in those six states. We have our professional affiliations and network of people.

I think that’s an important thing to bring up – no woman or no man is an island. As a practitioner, bring in people who know, like certified lending professionals, divorce lending professionals who know this part of the business, CPAs, or when necessary, if you see something funky going on, “Hey guys, you got to see a lawyer.”

We don’t require people to retain attorneys, but as a mediator, if I see something weird – somebody hasn’t filed taxes in five years and suddenly they don’t own a single bank account or credit card – you’re like, “Wait a minute. I was born at night, but not last night.”

Going back, it’s pretty unusual that we are exclusively online. We’ve been doing it for 14 years. People seem to enjoy it because we work with a lot of professionals like C-suite people and folks who travel a lot for their jobs. We can meet when one is getting divorced in California but currently on business in Dallas, and we can make the process still move forward for them.

Jody: If any of our listeners wanted to reach out to you and Cheryl, how would they find you?

Joe: The best place is our website, equitablemediation.com. I always got to be careful not to spell it as “meditation.” We get that a lot. On there, we have our learning center where you can go and research things.

I think a theme that you and I both share is an educated client is a good client. You don’t have to be an expert, people. You don’t have to do it yourself. Hire a professional, build your team, get your people on board, but it’s good to have a little bit of information up front as a client to know what they’re doing.

We have a whole learning center with courses and podcasts and blog articles and videos. You can basically go out and get educated. Then there’s information on us, and if you want to schedule a free call, you can certainly do that.

If you’re a divorcing couple and you’re not really sure if mediation is correct for you, schedule a free call with my partner Cheryl, or you can schedule a meeting with me if both parties want to be present. We really just want to give people information, let them decide if mediation’s right for them, and then we’re always happy to help any way we can.

Jody: Joe, I really appreciated this. It was a fun, engaging conversation and I look forward to having more of these conversations in the future.

Joe: Thanks for having me. I really appreciate it.

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Contact Information:

• Website: equitablemediation.com
• States served: Washington, California, Illinois, New York, New Jersey, Pennsylvania
• International mediation services available
• 100% virtual mediation platform (14+ years experience)
• Free consultation calls available
• Comprehensive learning center with educational resources
• Host: Jody Bruns, Divorce Lending Association (CDLP and REMS certifications)