What are the steps in deed in lieu of foreclosure?

baanjo1 · Joined: 24 Aug 2006 Posts: 1 3.09 Dollars($)

I have a condo in Denver that has been on the market since January. Two yrs old- very nice- No offers. I have moved out of state, retired, have less money and cannot keep making the payments as everything adds up to more than half of my net monthly income. I am ready to lose everything I put in just to get out from under. What steps do I need to take in order to do a deed in lieu of foreclosure? I don't want to rip the bank off- I just can't keep paying when the market keeps losing equity. What will I need to do? Thanks. PJ

Guest

Hi Baanjo,

I think you have taken the right decision.If you aren't working and don't have the extra money to make loan payments, then it's better to get out of it as soon as possible. At least you will be relieved for the remaining years of your life.

Thanks.

Jessica · Posted: Thu Aug 24, 2006 10:58 pm Post subject: RE:Is deed n lieu a good option

Hi Baanjo,

I don't think the deed-in-lieu is a good option as it can affect your credit score, though not by that extent as a foreclosure.

I am not aware of your age, otherwise I would suggest taking a reverse mortgage for which there are no monthly payments at all. You get loan advances instead and at the end of the loan term, you make all payments.

Know more on how reverse mortgages work if you wish to go for it.

If you still feel that deed-in-lieu is the right option for you, then go through our section on this topic.

Regards,

Jessica.

Caron

Hi Baanjo,

Here are the simple steps in Deed-in-Lieu of foreclosure.

As a borrower, you should document a valid reason and submit it to the lender.
Present all necessary documentation to the lender.
Allow the lender to inspect the inside of the property.
You may have to make a monetary contribution.
If the lender has escrowed cash for paying future taxes and insurances, you may have to forego the reimbursement of those funds.
Special wording should be used in deed-in-lieu to document the understanding between the lender and borrower.
Before accepting the deed in lieu, the lender should have the title re-examined and then an owner's title insurance should be issued to him.

The whole transaction should be carried out by an escrow company with new title insurance.

Hope you will benefit from this information.

Thanks,

Caron.

Guest

My husband and I sold a rental home last August and carried the note ourselves. Subsequently, the borrower lost her job and can no longer pay the mortgage. Due to the lack of funds on her part, we have offered to assist her in selling the house, taking our pay-off and incurred expenses when the house sells. If the house doesn't sell within a reasonable time, would a deed in lieu of foreclosure be our best option. We could then rent the property and probably come out a lot better on taxes.

blue · Posted: Wed Jun 27, 2007 5:05 pm Post subject:

Hi Jan,

Welcome to Mortgagefit discussion board.

Foreclosing on the house would mean added expenses as well as involvement in terms of time with all the proceedings. A deed in lieu of foreclosure would be a suitable option to select if the borrower is not able to continue the mortgage and the house does not get sold.

You could then rent it out if you like.

Do let me know if you have any other questions.

Thanks
Blue

Guest

WE are currently not late on our mortgage but we have been trying to sell a house for three years. It is listed for 45% lower than the bank originally appraised and 40% lower than the tax assessment. We are current but are working with the bank for a DIL. Is this the right way to go? What should we look out for if we do decide to do a DIL? How will this effect our credit?

sara · Posted: Mon Jul 23, 2007 3:03 am Post subject:

Hope,

I have answered your query at http://www.mortgagefit.com/deedinlieu/credit-effect.html . Please have a look and then if you have further queries, do let me know.

Guest

I purchased a home on may 08 and can not make the payments because my husband lost his job and can not afford childcare and spent money making home repairs. i have accepted a job in another city and will relocate, what other options do I have, please help. Will our credit be ruined. should I purchase car before making above request.

larry · Joined: 27 Jun 2007 Posts: 3328 474.49 Dollars($)

Hi Jr,

It's great to hear that you've got a job. But you should not think of purchasing the car in this stage of distress. Now as you've got a job, you should start to make the payments of the loan.

As you've already defaulted on the loan, it will affect your credit score and will be shown on your credit report for a certain period.

Guest

MY HUSBAND IS 64 AND HAD TO RETIRE FROM HIS JOB WE ARE NOT BEHIND ON OUR MORTAGE BUT CANNOT AFFORD THE PAYMENT SINCE HIS RETIREMENT OUR INCOME IS HALF OF WHAT IT WAS OUR HOME VALUE IS MORE THAN OUR MORTAGE IN TODAY'S MARKET IF THE HOME SELLS FOR LESS THAN THE MORTAGE ARE WE RESPONSIBLE FOR THE DIFFERENCE IN VALUE AND SELLING PRICE,WE ARE TO THE POINT OF PAYING OUR MORTAGE OR EATING,PLEASE HELP.

larry · Joined: 27 Jun 2007 Posts: 3328 474.49 Dollars($)

Hi Rose,

The process of selling your home for less than the loan balance is called a short sale. When you go for short sale, the lender may require you to pay for the difference between the outstanding balance on the loan and the short sale price and may pass a deficiency judgment against you in the court. And if the lender report of this deficiency judgment to the IRS, you may have to pay the required applicable tax.

Guest

I bought an investment property last year January. Since then, the market has taken a dive for the worst. The builder is selling the same unit $100k less than I paid for it. I had to add more than $500 a month to pay the mortgage. The mortgage has adjusted, and I don't have a tenant in there, and I cannot afford the mortgage any longer. Should I DLF the property?

sara · Posted: Mon Sep 24, 2007 9:51 pm Post subject: RE:

Hi Olowomade,

I have already given you a suggestion at http://www.mortgagefit.com/deedinlieu/investment-property.html . Please have a look.

Guest

Hi, I went through bankrupty this year. I didnt add my house and now i am looking at 4yrs more of a home equtiy loan that needs to be paid of 70,000. No way will i be able to pay it off.I retire this year also and have less income where i am not able to afford house repairs.Would i be able to do deed in leiu of fore closeure?

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