Deed in lieu of foreclosure?
Question:
Answer:
Most lenders won't consider a deed in lieu of foreclosure until you're several months behind on your mortgage payments. I doubt they would do it in your situation.
You're in a bad situation, with the house being worth less than the mortgage balance. Normally you could just sell the house and be done with it, but you can't do that in your situation.
It seems to me that some kind of credit damage is inevitable, unless you and your ex make enough money to comfortably cover the payments. I would try to get a new place ASAP, before your credit goes down the tubes.
Don't do it. I did the same thing and it wrecked my credit for 8 years. I'm just now getting back on my feet from it. Continue making house payment and make ex pay her share. Fix up the house and sell it for what the mortgage is. Trust me...deed inlieu of foreclosure is not the way to go. Good luck to you.
You need to talk to a good real estate investor about doing a short sale. They will negotiate with the bank to accept less the value of the home, and they will take the home, depending on many factors they may be able to give you some cash in the process, however it is unlikely the bank will negotiate with you or an investor unless you are behind but i recommend finding out first before initiating any action. Check your newspaper for we buy homes any condition type of ads. there are a lot of crooks in this space so be very careful.
Another option with mortgage delinquencies on the rise your bank may be willing to refinance your note to payments that you can afford.
Good luck.
While I don’t have any advice about whether you can initiate a deed in lieu of a mortgage, I have other suggestions for you that may help you out of this situation:
1. Consider renting the place to someone else. You may be able to rent out a room or the basement or the entire property. Or if your city’s zoning allows it, may be consider renting your garage to a small business owner who needs some work space.
2. Consider talking to your mortgage company to lower your payments. They will work with you, because foreclosures and lawsuits are very expensive, plus they stand to lose money on the forced sale. Or contact a local mortgage broker; you may be able to re-finance.
3. Call your state representative. Your state may offer emergency funds to save your home from foreclosure. Pennsylvania does this. It’s call Act 91. The state will give you grant money to cover your mortgage payments. Perhaps your state offers something similar.
4. Call a certified credit counseling agency. You may be able to restructure your other financial obligations, so that you can afford the mortgage.
Don’t be embarrassed. Just call around for help. This kind-of thing happens to everyone.
BTW, if you are considering a deed, please read your loan documents carefully. Most lenders include a “due on transfer” clause in the contract; this means the entire loan in due as soon as the property is transferred (deeded) to someone else.
Good luck.
Sharmil McKee
Attorney
http://www.mckeeoffice.com
First of all you need to find out if you live in a community property state (divorce issue)
Then you need to know that lenders do not want to be in the real estate business to own properties because of the federal laws castigating them for bad loans (reserves issue). Because of that they usually will work with you and give you (and in the case of community property, your spouse) the opportunity to either sell or reduce the payments until your albatross flies away.
Having said that, get an attorney to negotiate with the lender.
Usually in the agreement (forbearance) you are given time to do several things including sell, rent, increase your income etc. (unfortunately getting rid of the spouse won't be one of them) If everything fails and the Albatross decides to stay and nest on your head, then the agreement you strike with the lender should reflect that you will give them a deed in lieu of foreclosure.
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