Avoid Being Foreclosed Upon With A Deed In Lieu Foreclosure
March 1, 2009 by Admin
Filed under Stop Foreclosure Options, Stop Foreclsoure General
A deed in lieu foreclosure is a method that can help you stop foreclosure when you are in default. Maybe you are afraid of losing both your house and the investment you made with so much effort.
On top of that, you fear the effect that a complete foreclosure can have on your credit score for years to come. Homeowners that do not see the light at the end of the tunnel would do right to study the possibility of a deed in lieu foreclosure to avoid foreclosure proceedings.
How does a deed in lieu foreclosure work
In order for you, the homeowner, to obtain a deed in lieu foreclosure, you and the lender have to agree on the transfer of the title of the deed to the financial lending institution.
To put it shortly, the lending society becomes the owner of the property in question. In return, a homeowner that could not fulfill his or her mortgage obligations is now exempt from repaying back the debt still owed on the property.
An important benefit of a deed in lieu foreclosure signed in agreement with the lender is that the credit rating will not be affected as a complete foreclosure process would. Besides, the original homeowner ceases to have any liabilities regarding the said house.
A deed in lieu foreclosure is a non-judicial settlement. Anyway, one thing to remember is that a homeowner that chooses a deed in lieu foreclosure as a way to avoid foreclosure has to sign it at the beginning of the foreclosure proceedings.
Does your lending company want a deed in lieu foreclosure?
|Not all deeds in lieu foreclosure proposals are accepted by the lending organizations. They tend to accept them more when they know that it has become impossible for the homeowner to pay off the mortgage.
It is thus not worthwhile for the lenders to seek a deficiency judgment, or a legal court order to recoup part of the unpaid balance of the mortgage debt. Lenders usually go through with the foreclosure proceedings when the debt is lower than the property’s value.
The primary benefit of a deed in lieu foreclosure for the lending company is obviously of a financial nature. By reaching an out of court agreement they save significantly on judicial costs and lawyer fees.
Who is responsible for any liens on the property?Who is accountable for possible liens on the house?
Prior to signing the deed in lieu foreclosure agreement, the lending society ensures that this contract does not mean accepting responsibility for mortgage liens on the property. In other words, although the lender now holds the title, it will be a different entity from any liens on the house like a contractor claiming a payment, etc.
The next logical step for the lenders is to sell the real estate and recuperate the money they lost. The news owners are the ones that will have responsibility for any pending liens, if any, on the property.
In a nutshell, by going for a deed in lieu foreclosure, homeowners stop the unpleasantness of foreclosure and at the same time avoid a damaging statement of full foreclosure on their credit history.
More Stop Foreclosure Tips:
FREE Stop Foreclosure Report
