What are the steps in deed in lieu of foreclosure?

Samantha

Hi Liz,

Welcome to the forum.

I can feel what you're going through - it's been a tough situation for you. But have patience and let's hope things work out your way.

As for the deed-in-lieu, just have a talk to your lender and find out what he's saying.

Since you have been thorugh bankruptcy, I can interpret that you've been in some kind of financial hardship and if you can prove this to the lender, perhaps he will agree to the deed-in-lieu. But I do have a question - which chapter did you file? If it's chpater 7, then you need not pay for your debts anymore. But is it chapter 13 then?

Hope this helps...

God bless you.

Samantha

Guest

I am a 61year old women who was hospitalized last year and was told I had to cut down my workload and of course.this lowered my Income almost in half. My house is on the marketand I have about 20,000,or more in equity in it. It was appraised in oct for 305,000. I have rented a house in another city in fear of losing the house and not having a place for me and my animals.Would a DIL be the right step for me?

Guest

I forgot to mention that my loan balance is 259,500.00 on the message I sent regarding a house that was appraised in october for 305,00.00 that I have up for sale and can no longer pay for. I am making half the money I used to make due to my doctor telling me I had to slow down. I am 61years old and will not be buying another home.

jenkin7 · Posted: Mon Nov 19, 2007 5:15 am Post subject:

Hello Liz,

How long has your house been on the market? No offers?

A deed in lieu could be an option for you and for that you should talk to your lender first and see if he is willing to accept it. In case of a deed in lieu, the lender cannot seek any deficiency judgement.

But I would suggest another option. Since you are already 61, you shall qualify for a reverse mortgage next year. This will save your home as well as your credit. Do you know about this reverse mortgage program?

If you can put up your house on rent for one year and can manage the monthly mortgage payments from that, then the next year you can go for this reverse mortgage.

Guest

Which has more adverse effects on one's credit? Thanks.

jenkin7 · Posted: Mon Nov 26, 2007 1:43 am Post subject:

Hello Julieta,

Both has negative effects on your credit but they are comparatively less than that of a foreclosure. A deed in lieu will lower your credit by about 50-100 points and a short sale will also lower it about 80-100 points. But in case of a short sale, it shows your initiative to sell the property and pay off as much debt as possible.

But there is an advantage with deed in lieu. The lender cannot seek deficiency judgement in this case but he may do so after a short sale.

Guest

The bank has presented me with a deed in leiu on a vacation piece of property. I am afraid that I may still owe something to the bank, and unable to afford it. I have my own home, can the bank put a lein against my primary to recover what I owe them on the vacation home? thanks

jenkin7 · Posted: Tue Dec 18, 2007 5:00 am Post subject:

Hello Karrie,

If you are going for a deed in lieu of foreclosure, then the lender cannot seek deficiency judgment for the unpaid balance.

Your home was not kept as a security for the loan so the bank cannot put a lien on it for a loan against your vacation property. There is nothing to worry about that.

Guest

When I agreed to a deed in lieu in 8/06, it had been appraised for 410,000 3 months earlier by HFC. HFC printed its fair market value as 410,000 on the deed and I would not have handed it over if I didnt think it was worth that. After handing the house over, I received a 1099 at year end 2006 saying they "forgave" 180,000. Can they do that? Can they really sell it for 180,000 less than the value and now stick me with that as income? I could have done better than that!

Guest

Hi Li,

That might be possible if the market is down.

But if they have forgiven the amount then you are not liable to pay that. And you don't have to pay tax on this forgiven amount either because there's a new law which protects homeowners from paying tax on this forgiven debt.

scherzeroni · Joined: 05 Jan 2008 Posts: 51 18.77 Dollars($)

Contact your current lender and ask for the forclosure department. They will go over all of your options including deed in leiu of foreclosure. You may be able to qualify for a forebearance. If you are able to afford the payments but not the repairs, then maybe you could refinance take the money out for those repairs without the payment being much more.

Guest

I have a house that I can no longer afford with a second mortgage. I had an interest only loan with a irs tax lien on the house. i have received foreclosure payments and my house goes up for sale 2-22, what are my choices. i have no problem leaving immediately but will the bank come after me. i make payments to the irs already and am current

Caron · Posted: Sat Jan 19, 2008 3:48 am Post subject: RE: house on foreclosure

Hi Lizzy,

Is it that you have though of taking a second mortgage but you cannot afford, so there's no chance of going for it? Or if you do have a second loan, is it the first loan that is interest-only?

What surprises me is that your lender has offered the mortgage even when there is a tax lien on the home. Usually if there is such a lien, and if you aren't able to pay it off, the IRS lien gets more priority to the mortgage lien. Hence lenders usually require a borower to pay off the lien and then take out a loan against the home.

Now, as for the bank coming after you, well, that can happen if you are doing a short sale or deed-in-lieu wherein you don't get enough cash from the home sale and you owe more than the sale proceeds. But if your debt is forgiven, the bank may not come after you. Or if you are in a state which follows anti-deficiency laws, then the bank may not come after you to collect the deficiency (loan balance - sale price). However, there are rules for forgiven debt. Do check out the rules with your bank.

Good luck

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.07 Dollars($)

You need to contact your lender for them to approve it. Once approved, they will tell you the steps needed to complete the transaction.

Guest

I have asked for a DIL but the bank said I would be responsible for for all of the mortgage owed. Which means I will still owe what I owe now. I see no advantage for me with a DIL. I'm desperate.

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