Deed in Lieu
Deed in lieu is an option presented to borrowers facing foreclosure. Deed in lieu agreements allow borrowers to return their house to the mortgage lender and walk away. Although homeowners' lose all vested monies and receive no sale proceeds they can avoid foreclosure and lessen credit damage.
Mortgage lenders are not required to offer deed in lieu agreements. However, banks benefit by this type of real estate transaction because it allows them to avoid the costly expense of foreclosure eviction.
Certain eligibility requirement must be met to obtain deed in lieu of foreclosure. Primary stipulations require the property to be the note holder's primary residence. In lieu deeds are not permitted with vacation homes or rental properties. Homes cannot be left vacant or empty during lender negotiations, and borrowers must be 31days or more delinquent with mortgage payments.
Not all properties qualify for the deed in lieu of foreclosure option. Borrowers' who have fallen behind with house payments must work with their lender to determine available options. Delinquent home mortgage loan accounts are assigned to bank loss mitigators who work as the borrower's advocate. Loss mitigators do not make final decisions, but guide borrowers through the process of options presented by the lender.
Foreclosure in lieu of deed is rarely the first option offered. Banks do not want to repossess properties unless no other options exist. Foreclosures are time-consuming and costly. Mortgage experts claim the average foreclosure costs banks $60,000 to $80,000 per property. When possible, lenders will first attempt to modify mortgage notes.
Loan modifications involve mortgage refinance. Terms of the note are permanently altered and repayment terms extended. Mortgage lenders generally require borrowers to cure mortgage arrearages or provide a down payment before modifying home loans.
When troubled borrowers do not qualify for refinanced loan modifications, lenders might offer a short sale option. When banks enter into short sale agreements they allow borrowers to sell the home for less than is owed. Short sales are no easy task and require the services of a real estate professional experienced in this practice.
Properties which have already fallen into foreclosure do not qualify for short sale approval. If you are delinquent on your home loan and cannot afford to continue with future payments, now is the time to contact your bank's loss mitigation department.
Deed in lieu is the last available option to avoid foreclosure. Borrowers are required to sign an Agreement in Lieu of Foreclosure and warranty deed; also referred to as quit claim or grant deed. Agreement in Lieu is used to outline deed in lieu terms, while warranty deeds transfer ownership to mortgage lenders.
Lieu in deed agreements are executed through an escrow company to record the borrower's mortgage as paid in full and transfer property ownership to the bank. Borrowers are released from future payments and lenders take immediate possession of the home.
Homeowners who need to sell their home to satisfy a short sale agreement would do well to seek out private real estate investors. When possible, work with investors experienced in the short sale process. Many investors purchase homes with cash to expedite real estate transactions. Considering less than 20-percent of short sale offers are approved, it is best to work with an expert to increase chances of success.
If you are facing foreclosure or have obtained short sale approval and need to sell your house quickly, submit property information via the "we buy houses" form.
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Published on November 13, 2009 at 01:44 AM