Deed in Lieu of Foreclosure

To avoid foreclosure, you may ask the bank to accept a deed to the property rather than foreclosing on the property. Though this will result in the loss of the house, it could safeguard your credit rating and enable you to find alternate housing more easily. Also, you won’t be liable for a deficiency judgment if the bank sells the home for less than the outstanding debt.

“While some homeowners want to delay the process while they scramble to pull together the cash to save their home, opting for the deed in lieu of foreclosure can be a relief. It also allows them to begin fresh sooner than they might if they were to go through the process of a full foreclosure. The mental toll on a family waiting to be foreclosed upon is pretty significant, so the deed in lieu gives them some control over the timeline,” says John Moran, a home mortgage specialist in Telluride, CO.

When a homeowner offers to return a mortgaged property to the bank, it must be voluntary without undue pressure or influence. If the transaction is tainted in any way, the homeowner can sue and if they win, the transaction will be voided and the value the value of the property will be returned to the homeowner.

In order to avoid the appearance of undue influence, the transaction must be initiated by the homeowner, who should send a written offer to award the deed to the bank. The bank must respond with a letter acknowledging the offer and outlining the conditions under for the conveyance of the deed. The property will remain with the homeowner until all documentation is completed and the transaction is finalized.

Before initiating the transaction for a deed in lieu of foreclosure, the bank should verify that there are no outstanding liens on the property, that the transaction is free of any contractual obligations and that the expense of executing a deed in lieu of foreclosure is lower than a foreclosure action.

According to Moran, the advantage of a deed in lieu of foreclosure is that “It also allows (homeowners) to begin fresh sooner than they might if they were to go through the process of a full foreclosure. The mental toll on a family waiting to be foreclosed upon is pretty significant, so the deed in lieu gives them some control over the timeline.”

Deed in Lieu of Foreclosure

To avoid foreclosure, you may ask the bank to accept a deed to the property rather than foreclosing on the property. Though this will result in the loss of the house, it could safeguard your credit rating and enable you to find alternate housing more easily. Also, you won’t be liable for a deficiency judgment if the bank sells the home for less than the outstanding debt.

“While some homeowners want to delay the process while they scramble to pull together the cash to save their home, opting for the deed in lieu of foreclosure can be a relief. It also allows them to begin fresh sooner than they might if they were to go through the process of a full foreclosure. The mental toll on a family waiting to be foreclosed upon is pretty significant, so the deed in lieu gives them some control over the timeline,” says John Moran, a home mortgage specialist in Telluride, CO.

When a homeowner offers to return a mortgaged property to the bank, it must be voluntary without undue pressure or influence. If the transaction is tainted in any way, the homeowner can sue and if they win, the transaction will be voided and the value the value of the property will be returned to the homeowner.

In order to avoid the appearance of undue influence, the transaction must be initiated by the homeowner, who should send a written offer to award the deed to the bank. The bank must respond with a letter acknowledging the offer and outlining the conditions under for the conveyance of the deed. The property will remain with the homeowner until all documentation is completed and the transaction is finalized.

Before initiating the transaction for a deed in lieu of foreclosure, the bank should verify that there are no outstanding liens on the property, that the transaction is free of any contractual obligations and that the expense of executing a deed in lieu of foreclosure is lower than a foreclosure action.

According to Moran, the advantage of a deed in lieu of foreclosure is that “It also allows (homeowners) to begin fresh sooner than they might if they were to go through the process of a full foreclosure. The mental toll on a family waiting to be foreclosed upon is pretty significant, so the deed in lieu gives them some control over the timeline.”

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