How does the process of a deed in lieu of foreclosure work ?
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Answer:
The following links both have good information. You have to remember that the lender doesn't have to take the deed back. If you have missed three or more payments, your home may already be in foreclosure, in which case even if you give the deed back it will probably show as a foreclosure on your credit. Your best bet at this point would be to try to sell the home.
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Generally a Deed in lieu of foreclosure will save the owner a tidy sum of money in legal fees.
The reason is because if the property goes into foreclosure, attorney fees are generally in direct proporation to the amount owed on the debt.
There could certainly be a deficiency balance owed and legal action may them be pursued - but your balance owed will be much less following the sale of the real estate.
Talk to your lender. Perhaps you can at least continue to pay the interest until such time as the home sells.
Or, you may be able to arrange a morotoriam (spelling?) which amounts to "due to hardship, payments are suspended for x number of months".
Stay in touch with your lender - NEVER avoid them. Let them know what's going on. There is a great difference in "can't pay" and "won't pay".
Hurt your credit rating? It would depend on how it is handled and how it is resolved - and how quickly it is resolved.
Foreclosure penalty? Is that set forth in your contract with the mortgage holder? Prepayment penalties possibly would survive, but I've not heard of a "foreclosure penalty".
Good luck.
You did not state why you were several months behind in your mortgage. If you are experiencing a hardship because of loss of job, illness in your family or any other hardship you should contact your lender and let them know the hardship.
Are you sitll collecting the rents? If so what are you doing with the rent you are collecting? if you are not collecting the rents what are you doing about getting rid of the renters?
Have you considered selling the property?
It looks to me as if you need to know your options about your property before you lose it.
As mentioned before you can sell the property.
You can call the lender and see if you can set up a situation where the back payments can be added as a 2nd mortgage. This way you will have to make two mortgage payments.
One will be to the current mortgage that you are behind in. The other will be your back payments, any late fees and all fees caused by your failure to pay on time You and the lender will work out a payment plan that could be anywhere from 1-2 years in which you will be allowed to pay back your back payments.
In order to qualify for this program, the reason for your failure to make your payments on time has to be over and you can now prove that you can make the payments as well as payments to the new 2nd that will be added.
You can still use a deed-in-lieu of foreclosure. Of course this will still be an item on your credit report.Simply call your mortgage company and tell them what you wish to do. This eliminaes the lender from going through the process of a long foreclosure procedure. Depending on what state you are in you can have a non-judicial foreclosure(Foreclosur is set by law) or a judicial foreclossure (Court ordered foreclosure) This normally saves the lender money. There is no penalty for that procedure.
#1 Make up the back payments and keep the property
#2 Bring the back payments current and keep the property
#3 Sign the property over to the lender with a deed-in-lieu
#4 Allow the property to go into foreclosure and lose the property.
I hope this has been of some help to you, good luck.
"FIGHT ON"
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