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Help with Deed in Lieu

Posted on: 04th Jun, 2007 01:11 pm
we are trying to sell our home via short sale. our arm adjusted and our monthly payment doubled. we recieved our first ceritified notice from our lender 1 month ago. if we aren\'t successful in selling via short sale, can we try to get the deed in lieu of foreclosure. i don\'t want my house to foreclose, i would rather give it back the bank the right way and not just walk away and leave it vacant. are we able to ask for this while the house is on the market, it\'s been on since feb with one offer that fell through. who do we contact to request the dil our lender or someone else?
thank you
nicole
sacramento, ca
Welcome Nichole.

You can obviously go for deed-in-lieu of foreclosure in case you find it difficult to sell the house through short sale. You need to contact the lender only and request him for the process. It is better that you explain to him why you are not able to come up with the payments or what problems you're going through while selling the home. This will help him understand your situation better and then he may agree to the deed-in-lieu.

Thanks.
Posted on: 04th Jun, 2007 11:10 pm
hi nicole,

as the house is on the market and has found a buyer, lender would be reluctant to accept the house through a deed in lieu. but you need to approach him and see what he says about it.

did you talk with the lender about any loss mitigation plan so that the mortgage can be continued?

if it can be possible then at least you can bring the loan current within a few months and then look for any possibility to refinance down the line.

miller
Posted on: 05th Jun, 2007 01:23 pm
We don't have any buyers, we had one but they couldn't get financed. The house has been on the market for 5 months now. And it has slowed down, we have had 3 open houses in the last 6 weeks with no one coming. And no viewings during the week. The first thing we did once we knew we couldnn't pay was we contacted the loss mitigation and they said they couldn't help us. We owe 311.000 and we are selling for 255,000 our last appraisal came it at 270,000. At this point we can't bring it current it would be over $6000 and our payments would be $3000 a month including our second mortage.
Posted on: 05th Jun, 2007 02:04 pm
Dmp, the situation you are in, a deed in lieu of foreclosure would be the only option left for you explore. There are chances that lender will accept a dil instead of foreclosing as foreclosure process means added expenditure & time delay for him. You should contact the mortgage company and tell about your financial situation and inability to continue the mortgage any further.

Colin
Posted on: 05th Jun, 2007 02:27 pm
thank you colin. we do have a contract with a real estate agent that will be up in the beginnig of July. should i contact the mortgage company now regardless?
Posted on: 05th Jun, 2007 02:38 pm
The earlier you contact the mortgage company it would be better and they would be more willing to listen to your problem. Delay will take you closer to foreclosure.

Let the contract be there as it is now and hopefully something positive will come up in the meantime. But get in touch the mortgage company at the earliest and tell them that you want to give up ownership of the house through a deed in lieu of foreclosure.

We all would be waiting to know what your mortgage company says about the dil.

Colin
Posted on: 05th Jun, 2007 03:14 pm
I actually talked to my real estate agent about this and she said that the difficult thing is that we have 2 mortgages. So they will both fight over who gets the deed. Through the short sale process our 2nd has already agreed to accept $8000 from the $81,000 balance. So she said that she will talk to them to see if they will forgo the balance so that the 1st can get the deed and they will give them $ 5000 back. We had a piggyback? loan when we got our house so we don't have just 1 lender to negotiate with. Does whe she told me sound right?
Posted on: 06th Jun, 2007 01:42 pm
when you take out a second mortgage apart from first mortgage then it is called as piggyback. it is used to avoid paying for pmi.

if the 2nd mortgage company agrees to such arrangement then it will be easier to convince the 1st mortgage company to accept a deed in lieu.

now you need to check if the 2nd mortgage company will agree to cancel the mortgage balance.

miller
Posted on: 06th Jun, 2007 02:38 pm
"So they will both fight over who gets the deed."

Nicole, as per laws the first mortgage holder having first lien on the house will take over the property and if the second company wants to get the property then it will have to pay off the first mortgage holder.
Posted on: 06th Jun, 2007 05:03 pm
thank you for your help, hopefully my agent can get a hold of someone to find out if we can do anything else.
Posted on: 07th Jun, 2007 09:29 am
Dmp, please do let us know what happens. And if any other solution can be found.

Miller
Posted on: 09th Jun, 2007 02:01 pm
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