Posted on: 24th Aug, 2006 06:57 pm
Hi Baanjo,
Here are the simple steps in Deed-in-Lieu of foreclosure.
Hope you will benefit from this information.
Thanks,
Caron.
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.
Hope you will benefit from this information.
Thanks,
Caron.
Not a problem MM. Let it be length but at least you should feel comfortable putting down your situation. The very first step that you should take is to contact the lender and state your problems in paying off the loan. Possibly he will suggest some option by which you can at least get out of the mess.
Now, as for short sale, as you say, the market isn't doing good, so chances of recovering the loan balance are very less. But it's not mandatory for you to pay the deficiency. I mean even if you don't pay it your debt may be canceled depending upon certain criteria. It's better that you ask the lender whether he'll collect the deficiency.
Regarding taxes, well, under the Mortgage Debt Forgiveness Tax Relief Act , you can avoid paying tax on canceled debt except if you are in California. But the advantage that I see in a deed-in-lieu is, the lender will probably not ask you for the deficiency. That's how it works for a deed-in-lieu. So, you can go for the second option. But whether you do a short sale or deed-in-lieu, you will be required to predsent a hardship letter to the lender explaining clearly the reason of not being able to pay.
Now, as for short sale, as you say, the market isn't doing good, so chances of recovering the loan balance are very less. But it's not mandatory for you to pay the deficiency. I mean even if you don't pay it your debt may be canceled depending upon certain criteria. It's better that you ask the lender whether he'll collect the deficiency.
Regarding taxes, well, under the Mortgage Debt Forgiveness Tax Relief Act , you can avoid paying tax on canceled debt except if you are in California. But the advantage that I see in a deed-in-lieu is, the lender will probably not ask you for the deficiency. That's how it works for a deed-in-lieu. So, you can go for the second option. But whether you do a short sale or deed-in-lieu, you will be required to predsent a hardship letter to the lender explaining clearly the reason of not being able to pay.
I was told that a short sale would not affect my credit b/c I have not been late on a payment yet. Is this true? I am military and have to move.
welcome hawkpilot,
short sale affects your credit less than foreclosure or deed in lieu of foreclosure. so you can sale out your property and pay off the mortgage company. have you consulted with your mortgage company yet? how much do you owe? can you cover total amount by selling out the property?
short sale affects your credit less than foreclosure or deed in lieu of foreclosure. so you can sale out your property and pay off the mortgage company. have you consulted with your mortgage company yet? how much do you owe? can you cover total amount by selling out the property?
I have seen a couple of posts where sellers have taken back mortgages that are now in default because the buyers were not able to make the payments any longer. The sellers now face the prospect of bringing a foreclosure action against the buyers. This is going to be a long, costly procedure. It is not at all unheard of for homeowners to neglect or even intentionally vandalize the property they are losing, adding measurably to the sellers loss.
The seller financed sale is going to increase in popularity out of necessity, as bank financing dries up and seller financing becomes an attractive alternative to motivate a sale, often at a higher purchase price than a regular sale could have produced.
The way to avoid the predicament mentioned above, the need to go through a long and costly foreclosure is to first put the property into a Land Trust, then sell the Beneficial Interest (the "shares" in the trust) to the buyer with the seller holding the bulk of the financing as in a regular seller financed deal.
Just like with an auto financed by a bank, the new owner gets all the benefits of ownership of the vehicle. With the Land Trust, the buyer gets all the benefits and advantages of owning the house outright; property tax write off, mortgage interest deduction, etc.
As with the financed auto, the only thing the buyer does not have is the title to the property. In the case of the auto, it is held by the bank. In the case of the Land Trust, the title is held by the trustee.
The trust agreement provides that if the owner does not keep up the property's payments, his status reverts to that of a rental tenant after a specified period to cure the default has passed.
The seller can then evict the former owner/tenant with an order from the landlord tenant court instead of a going through the foreclosure process.
Any and all money paid by the evicted owner is forfeited and the real owner is free to resell the property.
If you would like to learn more about how a Land Trust can help you quickly and safely sell a property that you can't sell, email me and I will send you a copy of an article I did on the subject. Did I mention that when you use a land trust to sell your property, there is no income tax or capital gain tax on the sale, no depreciation recapture on the sale?
Kemet
The seller financed sale is going to increase in popularity out of necessity, as bank financing dries up and seller financing becomes an attractive alternative to motivate a sale, often at a higher purchase price than a regular sale could have produced.
The way to avoid the predicament mentioned above, the need to go through a long and costly foreclosure is to first put the property into a Land Trust, then sell the Beneficial Interest (the "shares" in the trust) to the buyer with the seller holding the bulk of the financing as in a regular seller financed deal.
Just like with an auto financed by a bank, the new owner gets all the benefits of ownership of the vehicle. With the Land Trust, the buyer gets all the benefits and advantages of owning the house outright; property tax write off, mortgage interest deduction, etc.
As with the financed auto, the only thing the buyer does not have is the title to the property. In the case of the auto, it is held by the bank. In the case of the Land Trust, the title is held by the trustee.
The trust agreement provides that if the owner does not keep up the property's payments, his status reverts to that of a rental tenant after a specified period to cure the default has passed.
The seller can then evict the former owner/tenant with an order from the landlord tenant court instead of a going through the foreclosure process.
Any and all money paid by the evicted owner is forfeited and the real owner is free to resell the property.
If you would like to learn more about how a Land Trust can help you quickly and safely sell a property that you can't sell, email me and I will send you a copy of an article I did on the subject. Did I mention that when you use a land trust to sell your property, there is no income tax or capital gain tax on the sale, no depreciation recapture on the sale?
Kemet
That's some real good stuff about seller financing kemet. but what's all about depreciation recapture? any thoughts..
Hi
I dont have so much idea regarding this subject. Just I suggest you to take steps accordingly.
I dont have so much idea regarding this subject. Just I suggest you to take steps accordingly.
i HAVE A HOME,YET i DON'T HAVE MONEY TO PAY MORTGAGE ANY MORE.
i BOUGHT THIS HOUSE 2 YEARS AGO WITH INTEREST ONLY.CAN I USE DEED IN LIEU?
THANKS
i BOUGHT THIS HOUSE 2 YEARS AGO WITH INTEREST ONLY.CAN I USE DEED IN LIEU?
THANKS
Hi Donwong,
Welcome to our community forums.
If you don't have enough money to pay for the mortgage, you may request the lender to reduce your payments or may be suspend them for a while, so that you gather enough funds to start paying the loan. By the way, are you in financial crisis or have you been through a job loss? would you mind putting down the reason for being unable to pay down the mortgage?
A deed-in-lieu can be used but why aren't you trying out a usual sale if at all your lender doesn't suggest any other option to help you get out of the mortgage?
Welcome to our community forums.
If you don't have enough money to pay for the mortgage, you may request the lender to reduce your payments or may be suspend them for a while, so that you gather enough funds to start paying the loan. By the way, are you in financial crisis or have you been through a job loss? would you mind putting down the reason for being unable to pay down the mortgage?
A deed-in-lieu can be used but why aren't you trying out a usual sale if at all your lender doesn't suggest any other option to help you get out of the mortgage?
I HAVE MULTIPLE RENTAL PROPERTIES, BARELY GETTING BY WITH MAKING THE MORTGAGES. SOME UNITS CAN'T KEEP A GOOD TENANT IN I AM SERIOUSLY CONSIDERING BANKRUPTCY. HOWEVER, I'D LIKE TO BE ABLE TO HOLD ON TO A FEW OF THE PROPERTIES IF POSSIBLE. WHAT WOULD YOU SUGGEST? DON'T WANT TO LOSE PRIMARY PLACE OF RESIDENCE
Hi Nicole,
What I feel is, if you're comfortable making payments, you may file Chapter 13 which will help you make payments on your loan using a repayment plan approved by a trustee appointed by the court. But you need to check if you'll be able to file chapter 13.
To know whether you qualify for chapter 13 or 7, refer to http://www.mortgagefit.com/bankruptcy/chapter7-chapter13.html .
Thanks
What I feel is, if you're comfortable making payments, you may file Chapter 13 which will help you make payments on your loan using a repayment plan approved by a trustee appointed by the court. But you need to check if you'll be able to file chapter 13.
To know whether you qualify for chapter 13 or 7, refer to http://www.mortgagefit.com/bankruptcy/chapter7-chapter13.html .
Thanks
We have a house that has been on the mkt for over two years with no offiers. We've dropped the price 3 times, but with all the foreclosures and short sales in the area, we just can't compete. To complicate matters even more, my husband got a job transfer to another state. We've been doing the back and forth thing for a year and a half now and it's become very taxing on all of us. (we have a 3yr old) We are not behind on any payments, but cannot continue to do this. Any suggestions?
Hi Mary.
Welcome to the forums. If you cannot make the mortgage payments then consult the lender ASAP and if you don't want the property and also cannot sell it then ask the lender to accept the deed in lieu of foreclosure. BTW it will be going to hurt you credit Feel free to ask if you have any further questions.
Best of luck,
Larry
Welcome to the forums. If you cannot make the mortgage payments then consult the lender ASAP and if you don't want the property and also cannot sell it then ask the lender to accept the deed in lieu of foreclosure. BTW it will be going to hurt you credit Feel free to ask if you have any further questions.
Best of luck,
Larry
My husband and I want to know how long we have to wait to move from the time the deed in lieu process takes effect. Also how long until we can apply for another home loan?
Hi Tina!
If you have signed the deed in lieu and the lender has given you the "paid note", I think you can move in immediately. Generally the lenders forgive the deficiency that can take place from deed in lieu. You will have to wait for at least 36 months to apply for another home loan.
If you have signed the deed in lieu and the lender has given you the "paid note", I think you can move in immediately. Generally the lenders forgive the deficiency that can take place from deed in lieu. You will have to wait for at least 36 months to apply for another home loan.
MY MOTHER IN LAW LOST HER HUSBAND TWO AND A HLF YEARS AGO AND THAY HAD A LARGE MORTGAGE ON THEIR HOME...HE WAS STILL WORKING AND AFTEWR HE DIED AHE WAS LEFT WITH NO INCOME EXCEPT SOCIAL SECURITY. WE HAVE TRIED FOR A REVERSE MORTGAGE BUT THE HOUSE DOESN'T QUALIFY WITH THE LAGE MORTGAGE. SHE HAS EXHAUSTED ALL OF HER RESERVE AND WILL NOW HAVE TO VACATE THE HOME. DOES SHE QUALIFY FOR A DEED IN LIEW OF FORECLOSURE?