Deed In Liu

Guest

Hello,
Our house was destroyed by Hurricane Ike and we need information concerning a deed in liu. Due to the hurricane's destruction of our jobs we had to move out of state for our new jobs. We remodeled the house with the insurance money and placed in on the market over 5 months ago. We are very late on our mortgage payments because we cannot pay both our rental payment and the house payment (already talked to FEMA, benefits are up).
We have requested a deed in liu of foreclosure from the Mortgage company but they say 2 things:
1) because the loan is FHA it is not eligible for a deed in liu. I checked the loan documentation and there is no mention of this in the loan papers.

2) Even if it were eligible for a deed in liu, they cannot start to give us a deed in liu until foreclosure proceedings have started. I requested that they go ahead and start proceedings (the notice of intent to accelerate expired on July 3). I requested this because the area is totally destroyed and the likelihood that the house will sell in a disaster destroyed area with no available jobs is quite small.
The mortgage company has said that they will start proceedings on their own schedule and that there is no way to predict when this will happen.

My questions are:
1) Does having an FHA loan prohibit the mortgage company from giving a deed in liu?
2) is there any way I can speed up the foreclosure proceedings so that I can start the process for a deed in liu?
I have 6 years of surgical residency remaining. If I can rebuild my credit in that time, I can be prepared to buy a house when I am done. However, every month that they delay is one more delay to starting the rebuilding process.
Thanks!

Niicss · Posted: Tue Nov 03, 2009 1:37 am Post subject:

As far as I know, deed in lieu of foreclosure is available in case of a FHA mortgage. A lender would foreclose the property if you walk away from it or stop the mortgage payments. You should note that a deed in lieu of foreclosure is a better option than foreclosure. Though the credit effects are same, you would not be liable to pay the deficient amount to the lender.

jenkin7 · Posted: Thu Nov 05, 2009 12:04 am Post subject:

Hi Guest,

As far as I know, there is no such rule that prohibits deed in lieu of foreclosure on an FHA-insured loan. But a deed in lieu should be your last option. When you have tried everything and you have exhausted all your options, you can surely go for a deed in lieu of foreclosure. It's a process through which you can sign over the property to the lender to avoid foreclosure. FHA does not have its criteria to determine if a delinquent borrower qualifies for a deed in lieu. It is the lender who decides whether the borrower is eligible for it. He evaluates the borrower's financial situation, type of hardship etc. and determines the borrower's deed in lieu offer can be accepted.

savior70 · Posted: Thu Nov 05, 2009 3:13 am Post subject:

To afcpal,

You are delinquent on the loan and have not made payments for months. Generally, a lender would have started foreclosure proceedings in such a situation. It costs the lender some money to foreclose on the property. In this situation, the lender probably thinks he would not be able to recover the loan amount and the foreclosure costs from the sale of the property. This is why the lender appears to be reluctant to foreclose on the property. But you have no option to speed up the foreclosure process. I think you ought to talk with the lender and convince him that a deed in lieu will be a better option not only for you but also for them as they will spared the cost of foreclosure.

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