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Jahrmann
Guest
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Post subject: Deed in Lieu - do you have to wait? |
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| Do you have to wait until you are in a default situation until you can call the lender and talk about a deed in lieu? What if you are up-to-date on your mortgage payments, but want to give the property back to the bank? Thanks! |
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jameshogg
Joined: 20 Dec 2005
Posts: 10148
Location: Nevada
941.94 Dollars($)
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Post subject: |
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Hi Jahrmann,
Generally lenders do not accept a deed in lieu if you are current on your mortgage payments. However, you can definitely speak to the lender and try to negotiate with him so that he accepts a deed in lieu.
Thanks |
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Lyn
Guest
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Post subject: 1099 on a deed in lieu |
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| I'm in the process of the deed in lieu. My lender told me that I'd be receiving a 1099, which is income that I'm going to have to file next year. Why is that? I lost money on the house and now I have to claim income on the property? |
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lou
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Post subject: foreclosure or deed in lieu |
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My parents are in their mid 80's and have found themselves in a negative amortization with no equity. They are moving into a retirement home out of state and can't sell their home. What will happen if they just walk away?
Their credit is not a concern at this point. |
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jameshogg
Joined: 20 Dec 2005
Posts: 10148
Location: Nevada
941.94 Dollars($)
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Post subject: |
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Hi,
To Lyn,
In the process of deed in lieu, the lenders forgive the deficient amount resulting from the sale of the property. This is considered as your income by the IRS and thus you need to pay taxes on it.
To lou,
If they walk away from the property, the lender will foreclose the property. The lender will claim the deficient amount resulting from the sale of the property. If they cannot pay the deficient amount, the lender may place lien on their other property.
Thanks |
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worried
Guest
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Post subject: deed in lieu |
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| How does a deed in lieu of foreclosure affect a second mortgage or lein? |
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Dara
Guest
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Post subject: deed in lieu |
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| Wouldn't the Mortgage forgivness Debt Relief Act prevent youu from having to pay taxes on a Deed in Lieu? |
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smithsussane
Joined: 18 Sep 2008
Posts: 10020
Location: Alaska
917.78 Dollars($)
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Post subject: |
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Hi,
To worried!
Though your first lender accepts deed in lieu, you will still be liable to pay off the second lender's dues. If you do not pay the dues, he will have the right to charge off the dues to a collection agency who will in turn collect the dues from you.
To Dara!
Yes, depending upon your state laws, you will get tax relief due to the Mortgage Forgiveness Debt Relief Act.
Sussane |
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anonymouskc
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Post subject: deed in lieu and credit scores |
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| How does deed in lieu affect crdit scores compared to bankruptcy? |
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jameshogg
Joined: 20 Dec 2005
Posts: 10148
Location: Nevada
941.94 Dollars($)
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Post subject: |
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Hi anonymouskc,
In deed in lieu of foreclosure, your credit score will go down by 250 points whereas in bankruptcy, it will go down by 200-250 points. However, in deed in lieu, the deficient amount resulting from the sale of the property will be forgiven.
Thanks |
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saltman
Guest
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Post subject: Deed in lieu on investment property? |
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Hi Jessica:
I own an investment property that is now worth less than half what we paid for it. We have a 5/1 interest only mortgage that will begin adjusting in about a year. Our tenants just moved out and we will have to spend some additional $$ to get the house ready to rent again. We were breaking even on it previously, but if the payments go up, we will end up losing even more money.
We had been current on the payments, but stopped to get the bank to possibly negotiate with us. We are now 2 months behind. At this point, it seems to make sense to try and walk away from the property rather than putting additional money into it (throwing good money after bad). Sounds like a deed in lieu would be the way to try and do this if the bank will take the property back. I realize this will hurt my credit.
Is a deed in lieu really the best option or should we do something else?
Thanks! |
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jerry
Moderator
Joined: 17 Oct 2005
Posts: 2615
Location: MICHIGAN
415.19 Dollars($)
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Post subject: |
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Hi saltman,
At this point deed-in-lieu seems to be the best option. Refinance doesn't necesarily increase your monthly payments, but if you are trying to do a cash-out refinance the payments can go up. A deed-in-lieu can stop the foreclosure, but it hurts your credit almost as much as a foreclosure does, dropping your credit by approximately 250 points.
If you want to keep the property, you can go for loan modification which can save you some valuable credit score and it can also reduce your monthly payments. However, you need to send the lender a hardship letter, convince them about your difficulties in making the payments and negotiate with them for a lower rate.
Thanks,
Jerry |
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AJ Effect
Guest
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Post subject: Foreclosure vs. Deed in Lui of |
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| What are the pros and cons to a foreclosure vs. a "deed in lui of" for an investment property? How much worse can the foreclosure affect me? |
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Joseph
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Post subject: DIL or short sale |
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| I am severely underwater on my mortgage and have to move. Is a short sale much better than DIL? I've been trying for a short sale for about 4 months and had one buyer walk away because the approval took so long. I haven't been making any payments, and was wondering if DIL would be better for my credit because I won't show as many missed payments. |
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Alessandro
Guest
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Post subject: |
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Hi Joseph,
A short sale will be less damaging for your credit than a deed-in-lieu. In case of a short sale your credit is lowered by almost 75-100 points. In compaison, a deed-in-lieu of foreclosure will hurt your credit by 250 points. In a deed-in-lieu, however, you will be forgiven the deficiency amount of the loan, while if you short sale you are required to pay that amount. |
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