Deed In Lieu Of Foreclosure

Posted on March 6, 2010
Filed Under Foreclosure Short Sale |

If you are facing foreclosure, you may have another option. The deed in lieu of foreclosure offers advantages to both the lender and the borrower. The main advantage to the borrower is that it immediately releases him from all or most of the indebtedness associated with the loan in default. It also saves the borrower from the embarrassment that can be attached to foreclosure proceedings. 

 

If you have been unable to make your monthly payments and your home has been on the market without success of sale, this form of foreclosure may be what is necessary to get you back on track.  Deed in lieu allows you, the borrower, to transfer your property to your lender voluntarily and your debt is often forgiven. This procedure will not save your home, but it will help the possibility of you getting another loan in the future. It will also help prevent the lengthy and costly procedure of a foreclosure. It is a negative strike on your credit, but not as bad as a foreclosure.

 

Most mortgage companies will require you to have your home listed with a realtor at least 30 to 90 days in order for them to approve you for a deed of lieu. Other things that may be required are as follows:

 

1.      The property may have to be vacant.

 

2.      You may have to get an interior appraisal of the property.

 

3.      You may need a minimum of 60 days prior to your foreclosure date.

 

This is not an option for someone who wants to stay in their home. This is only an option for someone who owns property and has had it on the market with no success of sale. Your lender can

 

inform you of their requirements based on your individual situation. Get informed and then act.

 

It may take some negotiating with your lender to complete this process.  If you do not feel qualified to negotiate something of this magnitude, seek advice from an expert in this field or from an attorney. Always be careful what you put in writing for it can be binding. Make sure you are knowledgeable as to the proper language being used in any official paperwork.

 

If your bank agrees to accept short sale, that is a better option than deed of lieu. However, if you are facing foreclosure and no buyer is interested in a short sale option, then consider deed of lieu. It just might save your credit from a “dark” mark to a somewhat “grey” mark, meaning it is the lesser of the two evils. 

 

Remember, you always want to avoid bankruptcy (the greatest evil). The overall summary is this…it would be great if you could bypass foreclosure. It is best to short sale, but if it is not possible, then shoot for a deed of lieu. This just might be the missing link you have been looking for.  

Anthony Petrucci
http://www.articlesbase.com/mortgage-articles/deed-in-lieu-of-foreclosure-683423.html

Comments

4 Responses to “Deed In Lieu Of Foreclosure”

  1. Q dog on March 6th, 2010 7:25 pm

    What to do with house? Wife left, cannot afford house. Foreclosure, deed in lieu, shortsale?
    I owe about 25,000 more on house than it’s worth in northern Illinois. The payment is half of my income I have been paying it but cannot keep doing this though. Should I try a deed in lieu of foreclosure, foreclosure, bankruptcy, short sale? Wife is currently on mortgage, how would she be removed from loan? Do I want to let her off of mortgage? Why? What should I do?

  2. ontopofoldsmokie on March 7th, 2010 12:27 am

    When you say wife left what do you mean? If you can prove she has abandoned the house you need to try for either a short sale, or better refinancing if you can get lower payments and want to stay in the house. You may need a lawyer to sort if out. If she is on the mortgage you may not be able to do much without her signiture on various forms. Can you contact her so you can at least get that part out of the way? Foreclosure or bankruptcy would be a last resort as it will disrupt your life and credit the most.
    References :

  3. Jacob on March 7th, 2010 12:29 am

    First, I would recommend speaking with your bank or whoever owns your mortgage. This is because they will need to approve any short sale or other way of avoiding foreclosure. Being underwater on a loan can be very frustrating and sometimes bankruptcy can be the best option, but first take some time to speak with your lender and ask if they can work with you on the loan.
    References :
    http://www.firstmortgagebuyer.com/

  4. S on March 7th, 2010 12:31 am

    First you need to talk to your ex-wife and come up with an agreement. Looks like you can’t do anything unless she agree since she is on the mortgage. If she don’t care about her credit and willing to take a hit, then you will need to contact the bank about a short sale first and market your house. The bank will need a hardship letter stating why you are in a hardship. Just explain your situation. After a couple months of marketing your house and it does not sell, than ask for a deed in lieu. They will only accept a deed in lieu if there is no lien or second mortage. If there is, they will let it foreclose so the junior lien gets eliminated. Also, if you have lots of money in the bank and huge assets, the bank will not budge with anything because they know you can afford it.

    Before doing anything, do lots of research on all options because the bank does not want the house. They will offer you other option first.

    Your wife can not be remove from the loan. If she don’t want to take a hit on her credit then she should up some cash to help out until you can find a solution. you can also offer the house to her and move out. If she shows no intreset then it is what it is.

    Good luck
    References :
    personal experience.

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