Deed in Lieu of Foreclosure

A deed in lieu of foreclosure is a legal option for people in the foreclosure process which allows the homeowner to voluntarily give ownership of their home to the lender to avoid foreclosure proceedings.

This action will damage the homeowner’s credit score as much as if the foreclosure was completed, so there is no benefit in terms of protecting credit score.

Before submitting a deed in lieu of foreclosure it is critical to take a few precautionary steps:

• Review your mortgage and financial situation
• Contact the mortgage lender and ask about their process for a deed in lieu of foreclosure
• Understand the steps required to proceed with a deed in lieu of foreclosure
• Understand all of the options available to you, our experts can outline these to you free of charge

The Advantages of a Deed in Lieu of Foreclosure

A foreclosure is a very expensive and time-consuming process, and many lenders will try to avoid it if possible. Usually, it is beneficial to both the borrower and the lender to use a deed in lieu of foreclosure rather than complete the foreclosure process.

For the borrower, there are a few benefits in using a deed in lieu of foreclosure including:

• Allows you to quickly stop the foreclosure and move on with your life
• The ability to put a stop to all duties and problems related to your mortgage
• Saves time and money when compared with other options, such as allowing the foreclosure to proceed
• Sometimes the lender will be willing to negotiate better terms, for example, the option to rent the home back

When a deed-in-lieu of Foreclosure is not Possible

In some cases where the debts owed on a property is too great, a lender will not accept a deed-in-lieu of foreclosure. If a lender were to accept this kind of deal, it would mean that they would lose part of their investment. They would also lose the ability to come after you for the remaining amount and no longer are able to garnish wages.

What to do in you are in Default of Your Mortgage

If you are in default of your mortgage it is likely that you’ve failed to make mortgage payments, or have failed to uphold some other terms of the mortgage agreement. If you act quickly upon receiving the initial documents, then you have access to a variety of solutions. Solutions that would be more beneficial than deed-in-lieu of foreclosure include: getting a new mortgage, renting part of the home, or selling the house. Deed in lieu of foreclosure is typically only used as a last resort, and if you’ve had a professional examine all your options. Our team deals with power of sales and foreclosures on a regular basis and can provide a free consultation.