With a deed in lieu of foreclosure, the delinquent homeowner gives the deed for the home to the lender, bank, mortgage company or whoever it is that holds the mortgage. In return that company agrees not to file a legal court ordered home foreclosure case.
The parties actually complete a written agreement that details the terms and conditions. Once agreed, the deed is turned over to the lender. The home must be moved out of. This means deeds in lieu are never an option for people seeking a way to save their home.
The deed in lieu offers some benefits to the distressed homeowner. The top one being an immediate release from the debt, the loan obligation, and the monthly payment requirement. The homeowner stops a public court ordered foreclosure from ever occurring. The deed in lieu will definitely be a negative credit, but less damaging than having a home foreclosure on your credit report. Plus there is a physiological benefit with avoiding the negative stigma of a involuntary home foreclosure. Deed in lieu’s can quickly end a very stressful situation in your life. And it can make it a little easier to start over when your financial situation improves.
The advantages for the mortgage holder, or lender, are that a deed in lieu of foreclosure is much less expensive and time involved with a home foreclosure. And if a foreclosure seems inevitable for the homeowner, then the deed in lieu is much less of a negative and adversarial transaction. This significantly reduces the possibility of the homeowner intentionally vandalizing, or damaging the property, as does commonly occur with forced foreclosure evictions. The mortgage holder more easily takes control of the house and then resells it. The delinquent owner waives any future claims to the home. This means it is unlikely the property will be included in a bankruptcy if the homeowner eventually files for one as a result of their financial situation.
Some key things to know about deeds in lieu: They are not automatically approved by the lender. Deeds in lieu are only considered on a case by case basis. All lenders have their own policies. Nearly all of them will only consider it when the homeowner is in some kind of financial hardship like a loss of job, serious illness, etc. In addition the monthly payments must be significantly delinquent. And a foreclosure is inevitable if things continue as they are.
Homeowners have to initiate discussions about the deed in lieu option and they must provide proof of their hardship situation.
A deed in lieu of foreclosure is viewed as an absolute last resort to avoid foreclosure. All mortgage holders will want to see that a serious effort was made to try and sell the house first.
As a result of increased intentional vandalizing of homes prior to moving out, many lenders have cash incentives to help the distress homeowner vacate the home. It is also called Cash for Keys. These cash incentives can help pay for the cost involved with moving and relocation. It is with the condition that no damage is done to the property.
For these and many other reasons, it is important homeowners educate themselves BEFORE attempting to contact the Mortgage Company. It will significantly increase the changes that the mortgage company will agree to a deed in lieu of foreclosure.
Foreclosure Alternatives is a member of Consumers Info USA. Has your home, and the monthly payments, become too much of a burden? Do you want to just get out? But contain the damage done to your credit? Our eBook will guide you step by step in the deed in lieu of foreclosure process. This is an instant download. Get Your Copy Now!
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