The Deed in Lieu of foreclosure offers several advantages to both the borrower and the lender.
There are a few Advantages of Deed in Lieu to the Borrower who is willing to give up the home early, and use the deal to guarantee that they will not go after you for a deficiency. (Of concern only in states without anti deficiency laws,) (7 states do, including Ca. and Az.) Also it is reported they seldom go after deficiency but may be of concern, never the less.
- You can usually Immediately negotiate a release of the personal indebtedness associated, and stop them from threatening to go after you for a deficiency on the home sale on defaulting.
- It stops the notoriety of your home going thru an embarrassing foreclosure proceeding.
- No foreclosure record will appear in credit history, though default will appear.
Some report this on your credit record, puts you back in lenders good graces for a year less then would be with "Foreclosure"...
The Disadvantages of Deed in Lieu is you likely cannot hang on and use the home as long, as a foreclosure, and has to be early enough to save lender money on legal costs of going thru foreclosure.
They do not have to accept this offer, but you can ask for their "Deed In Lieu" request form. It will, as we said, still be a default on mortgage score, etc., but technically from a future lenders view point, it is not as damaging as the word foreclosure.
Rental Investors Walkaway Forum Talk HereDisclaimer:
Author is a long time reporter publisher, but has no real estate or tax expertise or qualifications, is a real estate investor with 14 homes, six underwater, and many with 7% loans, and running a deficiency of $5,000 per month in the rental home business. Supplying a forum where fellow investors hung out to dry can discuss options. Reporting here is research and from seeking legal council on personal situation in Arizona.(See Continued Disclaimer Bottom of Page.)
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