Posted on: 27th Jul, 2008 12:09 pm
what is the best way to ask your lender to allow a deed in lieu of foreclosure?
I'd call them up on the phone first to see if it's something they are even entertaining at this time. If they are then the next step would be to mail them a request so it's documented in writing that you asked for it.
if your property ie a rental you cannot apply for deed in lieu so you have to go with a short sale ?
Hi benny!
You can apply for a deed in lieu foreclosure. It will be the discretion of the lender whether he will allow a deed in lieu or not. Lenders generally agree on a deed in lieu if you have defaulted on your mortgage payments for at least a month. So if you have defaulted on payments, you will be able to apply for a deed in lieu. If the lender does not agree, then you can check out the option of a short sale.
Feel free to ask if you have further queries.
Sussane
You can apply for a deed in lieu foreclosure. It will be the discretion of the lender whether he will allow a deed in lieu or not. Lenders generally agree on a deed in lieu if you have defaulted on your mortgage payments for at least a month. So if you have defaulted on payments, you will be able to apply for a deed in lieu. If the lender does not agree, then you can check out the option of a short sale.
Feel free to ask if you have further queries.
Sussane
I am not late with any paymnets but the writting is on the wall. Can i just do a deed in lieu of and fed ex the keys to the lender. I would be out of the house and be renting. I am 0ver 100k upside down so no realtor will list the house. Once I send the keys back am i free of the morgage/
Hi,
If you just hand over the keys, you are not free of the mortgage payments. If you're at all unable to pay, or anticipate that you may be in problems, request the lender to provide you with an alternative payment plan.
Since you're not yet in default, the lender won't consider any workout option other than an alternative repayment plan.
Take care
If you just hand over the keys, you are not free of the mortgage payments. If you're at all unable to pay, or anticipate that you may be in problems, request the lender to provide you with an alternative payment plan.
Since you're not yet in default, the lender won't consider any workout option other than an alternative repayment plan.
Take care
If you do a DIL aren't you still responsible for the part that they didn't write off? And do you have to pay Tax on it as well?
Hi Sherrie,
If you do a deed in lieu (DIL) of foreclosure, the mortgage company forgives the deficiency. This is what they generally do. However, in some cases, I've come across queries in the forum where the lender has gone after the borrower for the deficiency from the deed in lieu. Thus, it is always better to get it in writing from the lender that he will not sue you for the deficiency from the DIL.
In case the lender does forgive the deficiency, it will be considered as your taxable income. But if you have used the property as your primary residence, you can claim exemption from paying taxes on this forgiven debt amount.
If you do a deed in lieu (DIL) of foreclosure, the mortgage company forgives the deficiency. This is what they generally do. However, in some cases, I've come across queries in the forum where the lender has gone after the borrower for the deficiency from the deed in lieu. Thus, it is always better to get it in writing from the lender that he will not sue you for the deficiency from the DIL.
In case the lender does forgive the deficiency, it will be considered as your taxable income. But if you have used the property as your primary residence, you can claim exemption from paying taxes on this forgiven debt amount.