How can I qualify for a Deen in Lieu

shemiahsullivan · Joined: 10 Feb 2008 Posts: 1 2.43 Dollars($)

I have a condo/townhouse that I can no longer afford. Unfortunately, when my loan was approved I wasn't given the best guidance or information by my realtor and loan officer and entered into an interest-only for two years on my first loan that will reset to an ARM after that. Well this will occur in November of this year and I'm just dreading that payment - could be an additional $400-500. I, like many others, was advised to go stated income as I was told this would get me the best loan. I now know that I really screwed myself by buying this condo which I probably couldn't afford with my "real income" and not "stated".

On top of that, I graduated from grad school last year which has left me with $73,000 in student loans (undergrad & grad combined) and now that my grace period ended two months ago, I have a monthly payment of $500 dollars that I didn't have when I first purchased my loan. I am doing everything I can working two jobs and still living paycheck to paycheck just to pay all of my bills. Out of the 16months that I've had my mortgage, I have never once been late. My credit is excellent; however, I can no longer do this. I'm always stressed, which is making me physically sick; I literally work 7 days a week and I have no life; I'm sad, worried, and on the verge of depression.

Bottom line, I can no longer do this and I have come to the conclusion that I would be ok with letting this property go and rebuilding my credit if it means that I will have peace of mind and that I can smile again and enjoy every day God gives me. There's nothing like peace and I just don't have that with this house. Unfortunately, the value of my condo and houses in my area have declined drastically and I owe more than what it is worth. My question, is how do I convice my lender to allow me to do a Deen in Lieu? Do I have to be behind on payments? I have done a lot of research and I determined that I only have 4 options: 1. request a short sale; 2. request a loan modification; 3. request a short refi; 4. request a deed in lieu. However, I'm at the point where I want to go straight to option 4 - that's how bad I want my freedom.

I am in no way trying to take the easy way out for my poor judgement when purchasing this condo; however, I have to move ahead with what will be best for my life and I've decided that this is what I need to do in order to have my life back, which means more to me than any piece of property ever will.

With that said, what do I have to do, say, show to my lender that will convice them that a deed in lieu is the best for all involved? Your advice is greatly appreciated!!!

sara

Hi shemiahsullivan,

Welcome to the forums.

I do understand what kind of a situation you are in. But I also appreciate that you shared your situation in details and it’s good that you wish to move on ahead with whatever best your life can give you.

Considering the 4 options that you have suggested, you can go for a loan modification because somewhere I feel you wish to keep the home provided you are at peace of mind. So, what you can do is, explain your situation to the lender (you may need to submit a hardship letter) and see what he has to offer if you go for a loan modification. Otherwise, you may choose to go for a deed-in-lieu. The advantage of doing this instead of requesting for a short sale is, you may be able to avoid paying the deficiency amount which results from a lower sale price of the home.

Take Care

Guest

Hi Sara and thanks so much for you response. I spoke with countrywide's Loss Prevention deptment this morning and spoke with a very nice and understanding rep. We went over all of my finances and current situation that has caused me to no longer be able to afford my mortgage and she said that I prequalify, for now, for a rate reduction on both my 1st an 2nd. She is submitting the application and I have to fax in a letter of hardship and my last two paycheck stubs today, which will then determine how much of a reduction they can give me and how much this will lower my monthly payment. We spoke about deed in lieu and she said that if I'm still not able to afford the home, then a deed in lieu is an option. She said they would want me to try to do a short sale first and it would have to be on the market for at least 60days. I told her that my neighbor who has the exact same unit as mine has had hers on the market for 4 months now for $285,000 and has not received one interested buyer. I paid $310,000 for mine in 10/06, so as you can see the value has drastically declined and no one is buying, not even at $25,000 less than the last unit sold in the complex. When I explained this to the rep, she said that things are pretty bad and in that case, a deed in lieu would be an option, but I have to show that no one is interested in buying. So in addition to doing the rate reduction, I will be putting my house on the market this week just so I have all sides covered. I'm hopeful, but know this will be a long journey.

michelle · Posted: Mon Feb 11, 2008 6:04 pm Post subject:

Welcome back shemiah,

I am very happy to hear that you have contacted your lender so quickly and are already working on resolving your situation. Please do let us know how things progress.

As I read your original post, I also wondered if you might want to consider speaking to your student loan lender as well. Again, it will take some time and possibly more documentation, but you may be able to get your loans consolidated if they are separate. If currently all one loan, they may be willing to also negotiate a lower payment with you.

In many cases, the student loan companies, just like mortgage companies, would rather you have the ability to repay your debt so they just may be willing to give you some further relief.

Again, we all wish you the best. Please let us know if you have any further questions.

enriko · Joined: 05 Mar 2008 Posts: 68 0.15 Dollars($)

i do acctually agree with michelle. Talk to your student loan lender. They can be sometimes very understanding:)
All the best!

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