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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 Foreclosure
What 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 Sale
What 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.
What else can I help you with?
Do you have to short sale before a deed in lieu?
yes.
Can a deed in lieu be initiated with a cosigner?
Any transaction can be initiated by either party, but the signatures of both will be required on the deed-in-lieu agreement and property transfer documents.
Will a deed in lieu of foreclosure go on your credit report?
Yes.
How long does a deed in lieu stay on your credit?
7 yrs
Will a deed in lieu of foreclosure appear on your credit report?
From what I have gathered so far, a forclosure is the worst thing for your credit next to bankruptcy, and a deed in lieu is just better than a forclosure.
Deed in lieu?
Often confused with a "short sell", a "deed in lieu" is used when a homeowner facing foreclosure asks the lender to accept the deed instead (in lieu) of foreclosure. A sample request for a deed in lieu can be found at the source below.
Do you have to short sale before a deed in lieu?
yes.
Can you do Deed in lieu after foreclosure?
deed in lieu after foreclosure?
Is a short sale a better option than a deed in lieu of foreclosure?
You can only use a short sale if you have a potential buyer for your house. If the buyer's offer is less than you owe the lender then it "comes up short." You send the lender a request for a short sale letter asking it to accept the buyers offer as payment in full. A "deed in lieu" is used when you don't have a buyer and you want the lender to accept the deed to the house instead (in lieu) of foreclosing. Generally, you can't use a deed in lieu if you have a 2nd mortgage or substantial liens on the property.
Does a Deed in lieu of foreclosure affect credit the same as a foreclosure?
Deed in lieu of foreclosure is not nearly as devastating to your credit as is a full foreclosure. Below is an article about the pros and cons of deed in lieu.
Can you use a deed in lieu to put property you bought from father back into fathers living trust without effecting credit if he agrees?
You need to provide more details. A deed in lieu is a deed from a borrower to a lender in lieu of a foreclosure. That does not seem to be your case. You can provide more detail on the discussion page.You need to provide more details. A deed in lieu is a deed from a borrower to a lender in lieu of a foreclosure. That does not seem to be your case. You can provide more detail on the discussion page.You need to provide more details. A deed in lieu is a deed from a borrower to a lender in lieu of a foreclosure. That does not seem to be your case. You can provide more detail on the discussion page.You need to provide more details. A deed in lieu is a deed from a borrower to a lender in lieu of a foreclosure. That does not seem to be your case. You can provide more detail on the discussion page.
Can a deed in lieu be initiated with a cosigner?
Any transaction can be initiated by either party, but the signatures of both will be required on the deed-in-lieu agreement and property transfer documents.
Can banks be forced to accept a deed in lieu of foreclosure?
NO.
Can a deed in lieu of be on an investment property?
Yes. Absolutely.
Can a wife whose name is on the deed and the mortgage do a deed in lieu without the husband?
No. If the husband is a grantee on their deed then he must sign the deed in lieu of foreclosure. If only the wife signed then the lender would acquire only the wife's interest in the property.No. If the husband is a grantee on their deed then he must sign the deed in lieu of foreclosure. If only the wife signed then the lender would acquire only the wife's interest in the property.No. If the husband is a grantee on their deed then he must sign the deed in lieu of foreclosure. If only the wife signed then the lender would acquire only the wife's interest in the property.No. If the husband is a grantee on their deed then he must sign the deed in lieu of foreclosure. If only the wife signed then the lender would acquire only the wife's interest in the property.
Where may you obtain a 'Deed in Lieu of Foreclosure'?
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.
If you do a Deed in Lieu on your house instead of foreclosure how will that affect your taxes next year Will you suffer with a 1099-c due to a Deed in Lieu?
Generally not. These are normally structured so it essentially the lender buying the property for for the amount of the outstanding loan. The difference in the value, is paid by your facilitating the transaction if you will. There is no forgiveness of debt.
