What if any are the drawbacks for me the borrower to file a "deed in lieu of foreclosure"?
Question:
Answer:
A deed in lieu of foreclosure is used when an agreement is reached between the borrower and the lender in an attempt to avoid expensive litigation to foreclose and the inevitable hit on the borrower's credit reports. In most cases this method is used when the value of the property is less than or equal to the original loan. The agreement struck between the lender and the borrower usually first attempts to sell the property by the borrower over a period of time at the end of such time if the property has not sold the borrower will sign the agreement and the deed transferring the title to the lender with the lender giving up the right to file a deficiency judgment against the borrower for any money that the property would not bring to satisfy what is owed, once the lender sells the property. Such a transaction should not affect the borrowers credit.
Have you ask for a repayment plan?
Do you qualify for bankruptcy?
Is it possible to sell your house first, short sale?
If your financial situation has changed and you know you just can not keep the payments up or have waited too long to try to sell the house. A Deed in Lieu is better than foreclosure, you will mostly likely experience a negative impact on your credit, but this shows the Mortgage company didn't have to forcibly take your house.
Good Luck
The draw back with a "deed in lieu of foreclosure" is that you would be giving up any rights to the property. This is fine if you want to get out of the property and away from the payments. If you are experiencing a temporary situation that you expect to change shortly, you may want to allow the foreclosure to proceed, it will buy you more time. Most states have a 'grace' period after the foreclosure where you can buy back the property by paying off what is owed to the various creditors and courts. Check with a good real estate attorney for matters with this much financial impact.
Best of luck
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