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A deed in lieu of foreclosure is a deed to real property accepted by the lender from a borrower who is in default. It is accepted in order to avoid the expense of a foreclosure. If you are in default you would need to negotiate with your lender to see if they would accept a deed in lieu of foreclosure from you. There may be other consequences of a deed in lieu so you should seek the advice of an attorney if you are in default and contemplating your options. There may be a community service available for foreclosure counseling in your area.
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Can you initiate a deed in lieu of foreclosure before you become late in on your house payments?
You may be able to initiate it by discussing the situation with the lender and getting it to agree to allow you to give a deed in lieu of a foreclosure. It will be up to the bank and each lender has its own requirements.
I have a property which has 2 loans on it and I want to give it up via Deed-in-lieu of foreclosure to the primary mortgage company what will happen to the second loan?
If you gave a deed in lieu of foreclosure to the first mortgagee the property would remain subject to the second mortgage. Therefore, the first mortgagee may not agree to a deed in lieu. Also, your obligation to the second mortgagee wouldn't change. You should check for local agencies that are providing free services to homeowners who are facing foreclosure. You could start by checking for an ACORN office in your area. If that doesn't work then you need to consult with an attorney who could explain your position and negotiate with the lenders for you.
What is a deed in lieu of foreclosure?
It is a disposition option sometimes available to the mortgagor (borrower) to voluntarily deed the property to the mortgagee (lender) thereby avoiding foreclosure action.When a mortgage is delinquent and loss of the home is inevitable, a borrower may negotiate with the bank to return the home. They hand over the "deed" instead of the bank paying a trustee or attorney to initate foreclosure proceedings. This is slightly less damaging to the borrowers credit and saves the bank money and time.
Can I surrender a home and not be in foreclosure?
Yes, it's called a Deed-In-Lieu of foreclosure. You agree to walk away from the home and deed the property back to the mortgage company. This will still have a negative impact on your credit, but not as bad as a foreclosure. Most of the time, a Deed-In-Lieu is a cheaper option for the mortgage company as well because of all of the additional attorney fees/costs associated with the foreclosure process. However, a lot of mortgage companies still have rather restrictive guidelines for accepting a Deed-In-Lieu, some of these restrictions may require the mortgage has already been delinquent for some time, and that the property has been listed for sale at fair market value for a minimum of time (usually 90 days). Because the mortgage industry is struggling, these guidelines are ever changing and often can be bypassed. Call your mortgage company to find out what their specific guidelines are for accepting a Deed-In-Lieu. If you haven't already put your home up for sale, it would be a good place to start. If you can get a reasonable offer, even if it's less than the mortgage, your mortgage company may accept a short sale, which will be better for your credit and will also save the mortgage company money.
What loss mitigation tool may have serious tax consequences for the borrower?
deed in lieu
If I try a short sale and it doesn't sell before foreclosure can I give the deed to the bank and avoid the foreclosure?
AnswerYou can't just give them the deed, no. All you can do is offer it to them and ask them to accept it instead of taking the property all the way through the foreclosure process.The bank doesn't have to accept the deed in lieu of foreclosure, as it's commonly referred to. But they will want to have seen that you have tried to sell the house for a period of time before they will even consider accepting a deed in lieu.If you have run out of all other options, the bank will be more willing to consider taking the property back. So the fact that you're attempting a short sale is good. Don't wait until the last minute before the sheriff sale to offer the deed in lieu, as well, because it will be more cost-effective at that point for the bank just to carry on with the foreclosure and sell the house.But, if the short sale doesn't work, contact the bank and offer the deed in lieu of foreclosure. They'll have more paperwork and procedures for you to do, but it will help you get out of foreclosure a little sooner and won't be as bad on your credit.Lets look at this a bit from the lender's side. It will help to understand some of their issues so you can negotiate a better short sale.Do understand that negotiating a short sale can be difficult and pretty stressful as the lenders are overwhelmed with loans to sort out. How you submit the information, what you say and how you focus their attention on the defects and other things going on matters a great deal.One reason a lender may decline to take the property back without a full foreclosure process can be the junior liens. Many times people in default on one loan are also in default on other loans, have back taxes (property or personal), liens from other creditors and similar. If the lender completes the foreclosure then the junior liens will no long remain on the property though the borrower will still owe the money in most cases.Other things to consider. When a lender accepts the deed in lieu on a property they are missing out on the opportunity to see if the property would sell at auction. A deed in lieu is used to quickly move the process along so that the borrower hands over the property in reasonable condition plus waives their rights of redemption. Redemption can be pretty long in some US states. A short sale is better as the lender settles and there is no need to market the property as an REO like there would be with a deed in lieu.
What is the difference between deed in lieu and a short sale?
As a distressed property owner, you may hear about many alternatives to help homeowners avoid foreclosure. A deed-in-lieu of foreclosure and a short sale are alternatives for homeowners to avoid foreclosure. They both, however, are slightly different and come with specific risks and benefits. Read on below to see a comparison of both of these alternatives to avoid foreclosure.Deed-In-Lieu of ForeclosureWhat it is: A deed-in-lieu of foreclosure is where a Knoxville homeowner deed their home back to the lender, who will in return release the homeowner from their mortgage.Benefits: The lender promises to cancel any foreclosure proceedings. The homeowner avoids foreclosure and does less damage to their credit.Risks: The lender could still pursue the homeowner for a deficiency judgement.Why it could be the right choice: The homeowner will want to read the contract carefully to make sure the lender will not hold them liable for a deficiency judgement. While consulting with an attorney can be costly, having an attorney look over the contract is significantly less expensive than having a lender pursue you for a deficiency judgement.Short SaleWhat it is: A homeowner owe more on their home than it is worth. The seller negotiates with their mortgage company (or companies) to accept less than the full balance of the loan at closing. A buyer closes on the property, and the property is then 'sold short' of the total value of the mortgage.Benefits: The homeowner avoids foreclosure and does less damage to their credit.Risks: Negotiating short sales can take a long time. Distressed homeowners will want to make sure they select an agent that has experience with the process and is able to do them successfully. Otherwise, while the short sale is being negotiated, the homeowner may end up in foreclosure anyhow. Also, the distressed homeowner will want to make sure they know the terms of their short sale and that the lender agrees not to pursue them for a deficiency judgement.It can be difficult to determine whether a short sale or deed-in-lieu of foreclosure is the best option for you. While an experienced short sale agent will be able to provide you with information about your options, you should always be sure to seek legal counsel if necessary.
Can you do a voluntary foreclosure aka deed in lieu of foreclosure if there are two different lender mortgages on the house?
Unless you are willing to give the junior lienholder (the second mortgage lender) some sort of compensation (like a shortfall payoff), it can be difficult. Once a deed in lieu of foreclosure is done, only one bank gets the real estate. Typically, it's the first lienholder. The second mortgage would need to be released in order for that to happen. Banks may be more willing to consider "charging off" the second lien in recent months, since they know that if the loan does go into foreclosure their mortgage is going to be wiped out anyway, but it is often difficult to get them to voluntarily release their lien prior to foreclosure. Often, though, they will take a nominal amount - even $500 - since getting something is better than nothing.
Who owns the house when a foreclosure has been dismissed without prejudice?
The person named in the current deed owns the house but the property is subject to the mortgage. The bank may be able to clear their title problems that led to the foreclosure being dismissed and file the foreclosure at a later date if it remains in default.The person named in the current deed owns the house but the property is subject to the mortgage. The bank may be able to clear their title problems that led to the foreclosure being dismissed and file the foreclosure at a later date if it remains in default.The person named in the current deed owns the house but the property is subject to the mortgage. The bank may be able to clear their title problems that led to the foreclosure being dismissed and file the foreclosure at a later date if it remains in default.The person named in the current deed owns the house but the property is subject to the mortgage. The bank may be able to clear their title problems that led to the foreclosure being dismissed and file the foreclosure at a later date if it remains in default.
What is a judicial foreclosure?
It depend on which state you are in. In some states the judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. However, when no power of sale is present, lenders may, at their option, choose to forego a lawsuit and foreclose by selling the property, as outlined below in the "No Power of Sale Foreclosure Guidelines".
If you simply give your keys to your lender--leaving the house in perfect condition--do you just walk away and suffer the consequence on your credit--or will you have to pay the lender something?
The answer depends on the lender. You need to discuss the situation with them and reach an agreement to transfer title. They may ask you to sign a deed in lieu of foreclosure and there may be tax consequences for you personally. You should speak with an attorney.
Can a person let their house go into foreclosure even if they can make payments because the interest rate readjusted at a higher level and would put a strain on finances?
Obviously if you do not make payments the bank will eventually foreclose on the property. What you may want to do is give the bank a "deed in lieu of foreclosure"So the bank saves it's time and effort, and help salvage your credit rating. if you let it drag on it can only get worse.
