A Deed in Lieu Can Help You Avoid Foreclosure
Foreclosure is not something most new homeowners will have thought about, but it's a factor always worth considering whenever you go into the purchase of a new home, especially in today's tough economic times. More and more people find themselves facing possible foreclosure than ever before and if you're one of these people, then you'll understand the need to avoid it. There are options you can take in order to avoid a sticky foreclosure process, and one of these options is a deed in lieu.
A deed in lieu of foreclosure is a process which allows you to give away your property to your lender because you simply cannot afford to pay your monthly rate anymore, and a loan modification is not an option. The lender will then sell off your property in order to retrieve part of or all of the loan balance that you currently owe them; it's a system that allows you to avoid impending foreclosure that could be a lot less damaging to your credit.
When going for a deed in lieu, you will need to sign legal documents in order to avoid foreclosure completely. The first document that you will be required to send will contain the terms and conditions of the deed and will be signed by the lender and you; the homeowner (the borrower). The second will be the deed itself, which will convey the legal details of ownership of the property to your lender. In these circumstances it will be very beneficial to you if you hired a foreclosure prevention lawyer who can advise through the process and explain every aspect of the deed in lieu before you decide to go ahead with anything. They can also ensure that the process is all above board and runs as smoothly as possible.
When a deed in lieu has been processed, your lender will mark your borrower's note as fully paid and will provide you with two things. You will receive a statement which states that the debt has been cancelled, and another which will refer to the waiver of the right to a deficiency judgment, which is the lender's right to ask for any unpaid debt if the amount if not fully recovered from the sale of your home.
The agreement itself will be executed through an escrow company, who will receive the borrower's note, which at this point will be marked as paid. The escrow will then record the deed which transfers legal ownership to your lender and will then send you notice. You are then fully released from the liability of the mortgage payments.
Even with as many as 20% of homes nationwide being worth less than the current mortgage amounts (and as much as 40% of homes in States like Florida) there are still many lenders that are willing to consider a deed in lieu. In fact as recent as February 11, 2010 one of the countries' largest mortgage lenders, Citi Mortgage, announced a plan to allow qualified homeowners to stay in their homes for up to six (6) months without making any payments. Provided the homeowner agrees to deed the property back to Citi and to maintain the property during that time.
It's true that a deed in lieu might not always be your best option when it comes to sticky financial situations and a potential foreclosure, but often when a loan modification is completely out of the question or even simply unavailable to you, it is definitely a lot better than facing the foreclosure process; it's easier on your credit too in comparison.
Always remember to consult a foreclosure prevention attorney before trying to battle your foreclosure on your own; foreclosures contain a lot of ever-changing, complex legal issues and documents that you may not have the skill or knowledge to do yourself. A foreclosure prevention lawyer will understand your situation and talk you through the options that are available to you, because every option is better than a foreclosure.
