Deed-in-Lieu of foreclosure also referred to as a “friendly foreclosure” or “voluntary foreclosure” can occur when the lender is willing to accept the “deed” alone as satisfaction of the outstanding loan balance. This option is frowned upon by some homeowners because it takes away their chances of selling the house via short sale and negotiating terms with the lender. Lenders are not always willing to go this route as they usually want to try and short sale the property first. These occur with increasing rarity since the typical equity deficiencies are growing to greater proportions and most homeowners have more than one loan against the property. But if there is only one loan, it may make economic sense for the lender to accept the deed and forego the expenses of a formal foreclosure. If the lender agrees to accept the deed in lieu of foreclosure, the lender typically surrenders any further claims against you for any financial deficiencies. But this must be insisted upon. It is not automatic. Deed-in-Lieu transactions only make sense where your equity is insufficient to pay the loan in full. The processes and procedures for completing a deed-in-lieu transaction are nearly identical to that of a “Short Sale” in that a true hardship and fully documented verification of insolvency must be proved. We would be glad to assist you with determining whether or not a deed-in-lieu of foreclosure is an option for you to avoid foreclosure. Please complete the form below and we will respond to you promptly. |