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.
