Results for deed in lieu of foreclosure
On this page:
 
Investment Dictionary:

Deed In Lieu Of Foreclosure

A potential option taken by a mortgagor (a borrower) to avoid foreclosure under which the mortgagor deeds the collateral property (the home) back to the mortgagee (the lender) in exchange for the release of all obligations under the mortgage. Both sides must enter into the agreement voluntarily and in good faith.

Investopedia Says:
A deed in lieu of foreclosure has advantages for both a borrower and a lender; mainly the avoidance of time consuming and costly foreclosure proceedings. In addition, the borrower avoids some public notoriety, and may even be able to lease the property back from the lender.
The lender needs to assess certain risks which include, among other things, the risk that the property is not worth more than the remaining balance on the mortgage and that junior creditors might hold liens on the property.

Related Links:
Find out how to choose which mortgage style is right for you. Make A Risk-Based Mortgage Decision
Should you refinance your mortgage to purchase other assets? Learn how to weigh your risk. Mortgage Asset-Liability Management Made Easy
Learn how interest rates affect the housing market and how you can keep up with changes. How Will Your Mortgage Rate?
Option adjustable rate mortgages could make or break your home-buying experience. American Dream Or Mortgage Nightmare?
In a climate of rising interest rates, having an adjustable-rate mortgage can be risky. ARMed And Dangerous
We walk through the steps needed to secure the best loan to finance the purchase of your home. Understanding Your Mortgage


 
 
Business Dictionary: Deed in Lieu of Foreclosure

Act of giving Property back to a Lender without Foreclosure.

 
Real Estate Dictionary: Deed in Lieu of Foreclosure

The act of giving property back to a lender without Foreclosure.
Example: Abel, a builder, has a Construction Loan with a $300,000 balance against the house he is building. He offers the house for sale at $300,000 but no one buys it. He does not have the cash to continue to pay interest on the construction loan, and is in Default. The lender asks for a deed in lieu of foreclosure.

 
Wikipedia: deed in lieu of foreclosure


A Deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.

The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The principal advantage to the borrower is that it immediately releases him from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he would in a formal foreclosure. Advantages to a lender include a reduction in the time and cost of a repossession, and additional advantages if the borrower subsequently files for bankruptcy.

In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred. Both sides must enter into the transaction voluntarily and in good faith. The settlement agreement must have total consideration that is at least equal to the fair market value of the property being conveyed. Generally, the lender will not proceed with a deed in lieu of foreclosure if the current fair market value of the property exceeds the outstanding indebtedness of the borrower.

Because of the requirement that the instrument be voluntary, lenders will often not act upon a deed in lieu of foreclosure unless they receive a written offer of such a conveyance from the borrower that specifically states that the offer to enter into negotiations is being made voluntarily. This will enact the parol evidence rule and protect the lender from a possible subsequent claim that the lender acted in bad faith or pressured the borrower into the settlement. Both sides may then proceed with settlement negotiations.

Neither the borrower nor the lender is obliged to proceed with the deed in lieu of foreclosure until a final agreement is reached.


 
 

Join the WikiAnswers Q&A community. Post a question or answer questions about "deed in lieu of foreclosure" at WikiAnswers.

 

Copyrights:

Investment Dictionary. Copyright ©2000, Investopedia.com - Owned and Operated by Investopedia Inc. All rights reserved.  Read more
Business Dictionary. Dictionary of Business Terms. Copyright © 2000 by Barron's Educational Series, Inc. All rights reserved.  Read more
Real Estate Dictionary. Dictionary of Real Estate Terms. Copyright © 2004 by Barron's Educational Series, Inc. All rights reserved.  Read more
Wikipedia. This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Deed in lieu of foreclosure" Read more

Search for answers directly from your browser with the FREE Answers.com Toolbar!  
Click here to download now. 

Get Answers your way! Check out all our free tools and products.

On this page:   E-mail   print Print  Link  

 

Keep Reading

Mentioned In: