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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 1.12 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.

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi Gail.

Welcome to the forum.

If the bank is asking you the deficiency judgment then you should go for short sale as it will hurt your credit less than the deed in lieu of foreclosure.

Best of luck.

adonis · Posted: Sat Feb 02, 2008 2:06 am Post subject:

Hey Gail,

What's your situation? I feel there is some confusion here. In a deed-in-lieu, you hand over the property to the lender which is then sold off to recover the mortgage debt.

In case the sale price falls short of the balance, there arises the question of paying the deficiency. But lenders are not allowed to demand it if there is a deed-in-lieu.

You cannot be responsible for the entire loan balance. Just clarify once again with the lender. It shouldn't be the scenario.

Guest

Hello,

I have an "upside down" mortgage right now, well two mortgages, equaling 100% of the property. To make a long story short, we had a baby a year after buying the property and have been struggling ever since. We've never been late on a payment, but as our baby grows, its becoming more difficult to stay in the property.

Some other facts:

- Both loans are interest only

- Second loan is a HELOC with variable interest

- First loan is a 5 year ARM that will adjust in 2010

- We do now want to stay in the place, the space is too small for three people, so I would rather get rid of it than refinance it

- In our same complex, places with upgrades have been on the market for 6+ months, and our place will be much more difficult to sell

I've been looking at various options for months, and Deed in Lieu seems the best option for us since we just want out. We do not want to go through trying to sell it because even when the market was at it's peak, the previous owners had a horrible time selling it (we found this out after we bought it).

So my questions are:

Is the DIL infact our best option? I don't want to owe any taxes or have the risk of the lender coming after me for any part of the mortgage

Would the first step be contacting a real estate lawyer, or the lender?

Apologies for the lengthy post, and thank you in advance.

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What are the steps in deed in lieu of foreclosure?