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Deed in lieu: Helps you stay away from foreclosure

If you can't keep up with the monthly payments on your mortgage and want to stop a foreclosure on your home, you should consider going for a deed in lieu. To find out what deed in lieu is all about, and whether there's a better alternative, check out the topics below.

What is a deed in lieu?

A deed in lieu of foreclosure is where you deed your property to the lender in exchange for being forgiven the entire amount of the mortgage. The lender then sells off the property in order to retrieve as much of the unpaid mortgage amount as they can.

How does a deed in lieu work?

If you choose to try for a deed in lieu in order to avoid foreclosure, you need to sign several legal documents such as the Agreement in Lieu of Foreclosure and a deed. The first document sets out the terms and conditions of the deed-in-lieu, and is signed by both the lender and borrower. The second document, which is the deed, conveys legal ownership of the property to the lender.

The lender marks the borrower's note as "paid" and provides the borrower with two documents - one which states that the debt is canceled and the other waives the lender's right to a deficiency judgment (the lender's right to ask for the amount of the debt they are unable to recover from the sale of the home).

This agreement is executed through an escrow company which receives the borrower's note (marked as "paid") from the lender. The escrow then records the deed in the property's file at the county recorder's office and sends the note to the borrower, releasing the borrower from all obligations under the mortgage.

What are the tax consequences?

When you go for deed in lieu, you may have to pay 2 types of taxes. They are:
  • Deed tax: Since this deed involves the transfer of property, the borrower may need to pay a state deed tax on conveyance of property to the lender. The deed tax is $1.65 if there is no consideration, or when consideration is $500 or less.

    The tax is calculated on the difference between the fair market value of your property and your mortgage balance plus any liens removed from the property due to the deed in lieu.
  • Income tax on canceled debt: Under the Mortgage Debt Forgiveness Tax Relief Act (applicable till the end of 2012), you need not pay any income tax on canceled debt (unpaid loan balance which is forgiven by lender) resulting from a deed in lieu. However, a borrower will need to satisfy certain conditions for mortgage tax relief.

What are the other benefits of deed in lieu of foreclosure?

Other than the tax benefits, this mortgage process offers some other benefits to the borrowers as well as the lenders. Some of these benefits are-
  • It helps you avoid foreclosure. Foreclosure has serious negative consequences on your finances. Again, lenders also try to avoid foreclosure as it is time-taking and very complicated too.
  • Once the deed gets transferred through this legal process, there are no chances of your property going into sheriff sale. There are also no chances to initiate eviction process against you.
  • Here the lender is bound to accept your property as payment in full. So, no deficiency judgment can be imposed upon you.
  • Is loan modification better than deed in lieu?

    Mortgage loan modification is a better option than deed in lieu of foreclosure because it helps you keep your home. At the same time, you can save your credit scores from taking a big hit. That's because loan modification allows you to negotiate a lower interest rate and monthly payment on your mortgage.
    If you have missed payments, they can be added to your principal balance and the term extended so that your monthly payments become affordable. So, loan modification is a better choice.

    However, if you don't have sufficient income to meet your monthly payments, you won't be approved for loan modification. If this is the case, a deed in lieu may be your only choice to prevent foreclosure if your lender agrees.

when should you do a deed in lieu instead of foreclosure? On my foreclosure "all decrepencies are waived" would this be true with a deed in lieu?

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Jo D,

If your debt has been discharged in your bankruptcy filing and if you've not reaffirmed the mortgage, then the lender cannot ask you for any kind of payment.

Welcome Rodney,

Though the couple may have surrendered the property to the lender, the lender may not have foreclosed it yet. As a result, the couple is staying in that property.

Like | Dislike | Share | Posted: Tue, 08/16/2011 - 21:28

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi... I purchased my townhome in '05 and in '11 HOA (Home Owners Association) passed the recorded the CC&R's that only 10 units out of 150 townhomes can be rented in the complex... I'm unable to pay my mortgage with my job pay cut and moved in a room mate to help make payments. The HOA sent me a letter saying that my renter has to move to be in cpnplienance with the new CC&R's. I owe more on my townhome than what the propery is worth... My mtg is 140,000 and value is 114,000.. In 2011 I got married and visit the home daily. Roomate would like to buy the place, but cant' at this time.

Like | Dislike | Share | Posted: Sun, 08/12/2012 - 21:21 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

the reason why I asked, a couple across had their house bank owned, and they are still in it. I am thinking in order for them to do that, would be to give up there DEED. Is there another reason why they are still there, and the bank took the house?

Like | Dislike | Share | Posted: Tue, 08/16/2011 - 08:20 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have a mortgage in Illinois and Alabama. I lost my job and cannot pay both. If I do a deed in lieu for the Illnois house, how will that affect my Alabama mortgage? can I lose my house in Alabama, car or motor cycle? I have no other assets.

Like | Dislike | Share | Posted: Sat, 10/10/2009 - 19:26 | Post subject:

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Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Art G,

Welcome to MortgageFit Forums.

I understand this is a tough decision to take. But since you have got a job now it is required that the matter is settled early.

Deed in lieu will leave some effects in your credit report but it favorable compared to a foreclosure. And you can rebuild credit after deed in lieu of foreclosure.

Since you got a job out of state so I think you will not want to lose much time. Also as per your statement you don't have the money to pay off currently.

In that case deed in lieu is a good option. You may go ahead with that, but be sure to check that you are relieved off all the liabilities.
God bless you.

For MortgageFit,
Samantha

Like | Dislike | Share | Posted: Mon, 12/05/2005 - 11:01

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Paula,

After you sell off the property through a deed in lieu of foreclosure, you can give an eviction notice to the owners of the property and mention a stipulated time period to leave the property. It will be your discretion as to how much time period you'll allow them before they leave the property.

To Jeannie,

A short sale is a better option than deed in lieu of foreclosure in terms of your credit and future. A short sale will lower your credit score by 75-100 points where as a deed in lieu of foreclosure will lower your scores by 250 points.

Thanks

Like | Dislike | Share | Posted: Wed, 10/27/2010 - 01:54

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi albodie!

Welcome to the forums!

Yes, filing a deed in lieu of foreclosure will be a good option for you. It will help you in getting rid of the property and you will not be liable for paying any deficient balance to the lender.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Wed, 08/14/2013 - 21:02

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am in pre-foreclosure and have requested to do a Deed in Lieu. My account is under review and I will hear back around the 11th of Nov. While my credit is still half way decent, I have submitted for an apartment and am looking to move in Nov. Do run any risks by not living in my home while it's in the foreclosure process? I heard from a friend in a similar situation who sold their home in a short sale that they were advised to not move out until the process was completed. So now I am worried of the consequences and what they may be.

Like | Dislike | Share | Posted: Fri, 10/16/2009 - 14:57 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I lost my job just after refinancing at 100% of my home value, with a 2-year pre-payment penalty. I was ready to go into foreclosure, as I found another job out of state. The bank offered a deed in lieu. Is there a down side to this? Ther are no other liens on the house. I cannot make payments.

Like | Dislike | Share | Posted: Mon, 12/05/2005 - 10:47 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

my house depriciated 62000 I am at odds of wether to [url=http://www.mortgagefit.com/refinance.html]refinance[/url] my house to lower my payments or let them foreclose I can't afford the payment as of now

Like | Dislike | Share | Posted: Thu, 11/05/2009 - 12:35 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We purchased land to build our retirement home on, and then our family status changed and we are now raising 2 children. We decided to hold on to the property as an investment, but then the economy declined. The land company we purchased from went bankrupt and now similar parcels of the land that we purchased for $56,000 are now selling for $10,000. I have been in contact with the bank and just received paperwork on Deed-in-Lieu and what we need to do to participate. This is land we no longer want, and haven't paid the last mortgage payment or taxes because we were withdrawing money from and IRA to make due, Is the Deed-in-Lieu something we want to do?

Like | Dislike | Share | Posted: Fri, 10/29/2010 - 13:36 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We are currently going thru the process of DIL. If the Mortgage Co. does not get the amount of $ we owe by resale, can they request us in the future by garnishing our wage, our savings etc.. the difference?

Like | Dislike | Share | Posted: Thu, 12/08/2011 - 10:07 | Post subject:

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi anonymous!

Welcome to forums!

When you apply for a deed in lieu of foreclosure, it is expected by the lender that you will be delinquent on your mortgage payments. So, mostly people don't pay their mortgage when they apply for deed in lieu of foreclosure.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Thu, 07/26/2012 - 00:23

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My husband and I agreed to do a deed in lieu of foreclosure in December 2009, everything was ok until today when we received a letter from a debt collector stating that we owe the uncollected balance from the sell of our house. Can they do that? I thought the whole point of a DIL was that the debt was forgiven and we agreed to take a hit on our credit and turn the property back over to the lender.

Any advice?

Thanks

Like | Dislike | Share | Posted: Tue, 10/12/2010 - 23:11 | Post subject:

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Francine!

Welcome to forums!

Whether the lender forecloses the property or goes for a deed in lieu of foreclosure, it will have a negative affect on your credit report. However, you won't be liable for paying any deficient balance resulting from the property sale as your mortgage has been discharged in your bankruptcy filing.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Thu, 12/09/2010 - 22:38

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My lender and I were not able to agree on a loan modification amount. As a result, I have no choice but to allow my home to go into foreclosure. I have heard about "keyes for cash". I understand the fundamentals of this program, but what is the timeline and more specifically how can I receive compensation for moving expenses and motel fees at this already unstable time in my life?

Like | Dislike | Share | Posted: Mon, 03/22/2010 - 09:25 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My home is worth 230k. I owe $96k. It is a 20 year mortgage fixed at 6.32 % and my third year of owning it. However, I have lost my job and have had great difficultly landing another. And have falling behind on mortage payments by 4 months now, and the mortgage company has stopped accepting payments from me (just) recently. I don't want to lose my home...what is the alternative for me since I have a significant amount of equity in my home. But have received notice that I must contact the forclosure department. Just not sure what to do?

Like | Dislike | Share | Posted: Fri, 04/01/2011 - 12:41 | Post subject:

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

You can apply for a deed in lieu of foreclosure in order get rid of your existing property. However, you won't be able to get a mortgage to buy a new property immediately. You'll have to wait for 3-4 years in order to [url=http://www.mortgagefit.com/Mortgage-Basics/do-i-qualify-for-a-mortgage.h... for a mortgage[/url].

To Guest (CA Trouble),

You won't be liable for any taxes if you sell off your property through a deed in lieu of foreclosure after a bankruptcy discharge.

Like | Dislike | Share | Posted: Sun, 10/03/2010 - 23:41

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome robhop,

You should contact the lender and ask him to go for a deed in lieu of foreclosure asap. This will help you in getting rid of the property and the lender won't come after you for the deficient balance. Thus, the lender won't place a lien on your other property.

Like | Dislike | Share | Posted: Tue, 05/17/2011 - 22:48

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Iv been in my house for 4 yr, Im 3 months pass due- they tell me i dont qualify for a modification- i want them to add the tax and insurance to my morg but thy said no so I would like to do a deed in lieu. how long will it take from start to end?

Like | Dislike | Share | Posted: Thu, 10/22/2009 - 11:12 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We got a letter from Green Tree on a mobile home we turned over in a a DIL 10 years ago wanting the difference. We heard nothing from them until now.

We were told we would owe nothing on it if we turned it back over to them and it showed as paid on our then credit report. Why are they allowed to do this?

Like | Dislike | Share | Posted: Thu, 02/16/2012 - 17:19 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If I do a deed in lieu of foreclosure, will I have to make monthly payments to the mortagage company?

Like | Dislike | Share | Posted: Mon, 01/11/2010 - 14:24 | Post subject:

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi bev!

Welcome to forums!

A short sale will have a lower negative affect on your credit report compared to a deed in lieu of foreclosure. A short sale will reduce your credit score by 75-100 points whereas a deed in lieu of foreclosure will lower your score by 250 points.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Sat, 09/25/2010 - 00:44

Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

To Lawrence,

You're in a tough situation. You will have to apply for a deed in lieu on your first home with your first lender. However, you would be responsible for the second loan. The second lender will have the rights to sue you for the debts. As far as the construction loan is concerned, he would try to sell off the second home and try to recover the dues.

To Guest,

A deed in lieu will take around 90 days to complete. You should write a hardship letter to the lender and apply for deed in lieu.

Like | Dislike | Share | Posted: Fri, 10/23/2009 - 01:45

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My 2-yr old rental property in FL is "upside down" and I was subsidizing a Section 8 tenant at a cost of $800.00 per month, hoping for recovery then. My mortgage payment is a month behind. I can no longer pay for anything and considering going to the lender for a Deed In Lieu. What should I expect and what costs will incur. Thanks.

Like | Dislike | Share | Posted: Sun, 11/22/2009 - 18:30 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We sold the property but the new owners failed to record the deed with the county. They have since moved out without paying a dime in payments (since April 2009) to the private party lender, whome we used as well. The lender is now simply wanting their property back. However, we have received a deed in lieu of foreclosure form to sign and send back to them. We're not sure how this will affect our credit since it is a private party and if we could still be held liable for the payments the "new owner" failed to pay. Help?!

Like | Dislike | Share | Posted: Fri, 03/26/2010 - 06:58 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Mortgage was not reaffirmed in Ch 7 in 2005. Mortgage company refused to file reaff. Debt on mortgage was discharged. Continued to stay in home and make reg monthly payments until May 2013. Want to do Deed in Lieu of Foreclosure. Considering the discharge and the federal tax issues, if any, is DiLoF my best option?

Like | Dislike | Share | Posted: Wed, 08/14/2013 - 16:16 | Post subject:

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

Your query has been replied to in the given page:
http://www.mortgagefit.com/annoucements/about44510.html#184757

Take a look at it. Hope it helps you.

Like | Dislike | Share | Posted: Wed, 09/29/2010 - 23:13

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi stuckinsmyrna!

Welcome to forums!

You can apply for a deed in lieu of foreclosure in order to get rid of the property. A deed in lieu of foreclosure will lower your credit score by 250 points and will remain on your credit report for the next 7 years. You won't be able to get a new mortgage for the next 3-4 years. However, after the deed in lieu of foreclosure, you won't be liable for paying off the deficient balance resulting from the property sale.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Mon, 02/07/2011 - 22:43

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi zonemistress!

Welcome to forums!

It might take 90 days to complete the whole process. You won't be able to [url=http://www.mortgagefit.com/Mortgage-Basics/do-i-qualify-for-a-mortgage.h... for a mortgage[/url] immediately after a deed in lieu of foreclosure. You will have to wait for 3-4 years in order to qualify for a mortgage. Also, you need to take steps in order to improve your credit scores. For the time being, you'll have to rent a home.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Thu, 08/11/2011 - 21:58

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have been on Long Term Disability for over 10 years (SSD and insurer paid) and according to my state laws it cannot be Garnished.

I am current on all bills, and a have squeaky clean credit report for over 25 years despite my medical issues. However, COLA haven't kept up with the real Cost of Living and I have exhausted my retirement plans, pension and savings keeping current on my bills. Now I am faced with a home loan for 45k more than the value, after a recent re-apprised by the local county tax office, and after paying on it 9 years. Add to this a slap in the face, I don't meet the new bankruptcy formula for chapter 7. Anyone would be hard pressed to convince me Washington didn't see this meltdown coming and changed the bankruptcy laws.

Either way now for the Bigger Rock and the Harder Spot... my father-in law and mother-in law are in their late 80's and live with us. Now my mother in her late 80's is beginning to need the same help.

So I am in the process of developing a letter to the 1st and 2nd mortgage holders. In it I am asking for permission to conduct a short, or a voluntary foreclosure, with some agreement as to saving enough of my credit score to rent a decent apt or home when we all move.

Do you have any viable suggestions?

Thank you for any reply

Like | Dislike | Share | Posted: Sun, 05/02/2010 - 09:04 | Post subject:

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome Guest,

It is not mandatory for you to sign the promissory note as in case of a deed in lieu of foreclosure, you won't be liable for paying the deficient balance to the lender. As far as I know keys can be transferred to the lender for a certain amount of money. You should contact an attorney and he may be able to let you know more in this matter.

Like | Dislike | Share | Posted: Mon, 02/21/2011 - 22:11

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi jdeibert!

Welcome to forums!

You can move out of your property after you transfer it to your lender. After the deed in lieu sale, you'll get a 3 day notice period to leave the property. You'll have to leave the property within that time period.

Sussane

Like | Dislike | Share | Posted: Sun, 12/06/2009 - 23:36

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am in the process of doing a DIL. What do I need to do to make sure that I don't have to pay anything after all is said and done (deficiency) and also how much is deed tax in NH. Do I have to pay this.

Like | Dislike | Share | Posted: Fri, 03/26/2010 - 07:40 | Post subject:

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Chigurl!

Welcome to forums!

A lender will accept the request for a deed in lieu of foreclosure when you are delinquent on your mortgage payments. However, as you are facing hardship in paying off the mortgage dues, I would suggest you to contact your lender and apply for a deed in lieu of foreclosure. If the lender is convinced about your hardship, he will accept your request.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Fri, 06/04/2010 - 00:08

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If I decide to do a deed in leiu, how long would the other party have to stay on the property?

Like | Dislike | Share | Posted: Tue, 10/26/2010 - 06:52 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Tootie,

The mortgage lender will forgive the deficient balance resulting from the sale of the property in case of a deed in lieu of foreclosure. So, the question of wage garnishment does not arise.

To Jane,

You may request for a deed in lieu of foreclosure. It will be their discretion whether or not they will allow you the same.

Thanks

Like | Dislike | Share | Posted: Mon, 12/19/2011 - 21:54

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi I am having a hard time deciding what to do. I have an investment property that I am unable to afford now that my tentants are leaving and my husband passed away. The loans are under my husbands name but I have been paying the loans since he passed away. I dont want the properties and wondering if its best if I just walk away or ask the bank for a dee in lieu of foreclouse.

Like | Dislike | Share | Posted: Tue, 12/14/2010 - 12:23 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

can u tell me how long this would take? i mean when will i have to find another place to live.

Like | Dislike | Share | Posted: Thu, 08/11/2011 - 12:14 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi William,

Bankruptcy has serious negative effects on your credit history and score.

A deed-in-lieu requires some condition to be fulfilled and requires the lender's acceptance. They have already discussed under this thread.

Deed-in-lieu is preferable only if you have a place to stay. Both will have negative effects on your score but the effect of bankruptcy may be more.

[url=http://www.mortgagefit.com/bankruptcy/chapter13.html]Chapter 13 bankruptcy[/url] and deed-in-lieu both stays on your credit report for 7 years and chapter 10 stays for 10 years.

May be deed-in-lieu look slightly better in terms of getting a loan in future but lenders more often doesn't accept a deed-in-lieu due to title issues or the presence of other loans against the property.

James

Like | Dislike | Share | Posted: Fri, 03/31/2006 - 16:19

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

How to get rid of deed in my name after bankruptcy that was done to avoid paying deficiency set by the bank. How easy or difficult is it ? As simple as calling the bank. Should I ask for deed in lieu of foreclosure?

Like | Dislike | Share | Posted: Tue, 12/03/2013 - 15:44 | Post subject:

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest!

Welcome to forums!

If your name is not on the mortgage docs, then you're not responsible for paying off the mortgage dues. You can ask the lender to foreclose the property in order to recover their dues.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Wed, 12/15/2010 - 21:02

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We are in the middle of filling for bankruptcy. I was just told of a died in lieu. What would be better. What is better for for our credit when looking for a loan later. Thank you, God bless.

Like | Dislike | Share | Posted: Fri, 03/31/2006 - 15:25 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi fhjfpsmm,

The lender won't come after your other properties if you go for a deed in lieu of foreclosure as the deficient balance will be forgiven by the lender.

Hi Guest,

Unless you're delinquent on your mortgage payments, the lender may not consider your request for a deed in lieu of foreclosure.

Thanks

Like | Dislike | Share | Posted: Sun, 01/30/2011 - 23:50

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have voluntarily decided to walk away from my primary residence after I was able to find financing to purchase a new preimary residence. I can now no longer afford to make the payments on my orignal residence, nor do i wish to. Do you think that my original bank would consider a deed in lieu forclosure under these circumstances?

Like | Dislike | Share | Posted: Wed, 07/13/2011 - 10:29 | Post subject:

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome assumpta,

A deed in lieu of foreclosure will reduce your score by 250 points. You won't be liable for the deficient balance as the lender will forgive it.

Like | Dislike | Share | Posted: Sun, 06/13/2010 - 22:41

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome SSullivan,

If the owner had paid the dues in full to the lender and redeemed the property, then he or she can get back the property and stay on it.

To anonymous,

In case of a deed in lieu of foreclosure, the lender forgives the balance amount. You should contact the lender and ask him to forgive the balance amount so that you're not responsible for paying it off.

Like | Dislike | Share | Posted: Wed, 10/13/2010 - 00:03

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Here's my probem. Purchased condo in AZ in 2009 for $119,000 (I put $20,000 down and got the $8,000 tax credit), lost job 4 mo. later, after a year finally landed a job in TX; condos like mine are now selling for $93,000. I am an artist and it's not unusual to be job hunting every couple of years, so I've got an emergency fund set up for times of unemployment and would like to hold on to it for future lay offs.

I don't really want to rent my condo out and now will be paying rent in TX. I've never been late with a payment of any kind and just want out from under my mortgage in AZ. Do you think I would be a candidate for a deed in lieu of fc with my lending company? If so, should I discontinue making payments while to process is underway? Any suggestions would be appreciated.

Like | Dislike | Share | Posted: Sat, 04/02/2011 - 10:35 | Post subject:

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi mshope!

Welcome to forums!

If you are unable to pay off the dues as per the repayment plan that you've received from your lender, then he can definitely foreclose the property. You should contact your lender immediately and check out if he can help you in any way.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Tue, 12/29/2009 - 23:13

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Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Is it possible to get a mortgage after you have had a deed in lieu of forclosure?

Like | Dislike | Share | Posted: Thu, 01/07/2010 - 11:12 | Post subject:

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