When A Deed In Lieu Of Foreclosure Is Needed
Deed in Lieu - of Foreclosure
When you have exhausted all means to save your home from foreclosure, and your lender is unwilling to negotiate a loan modification San Diego homeowners program on your home loan than this option may be a way out for you.
In simplest terms you return the keys to the lender or bank who holds your mortgage loan. This is called a Deed in Lieu - of Foreclosure and it is the last resort in helping a homeowner avoid foreclosure.
Keep in mind that your lender would rather do a short sale as a liquidation technique than take a property back and manage it until it is disposed of, and sold off the books. This why a lender is normally willing to perform a mortgage loan modification on your home loan. If they accept a deed in lieu of foreclosure it allows the homeowner to surrender the property back to the mortgage company and to be released of any future mortgage obligations.
This is only a last ditch effort for the mortgage lender and it is only accepted if it makes sense to the mortgage company, and if they are able to market the property faster. This can be a problem in a market that has excess capacity of homes on the market which happens to be the case with today’s Real Estate market.
Some of the Qualifications for a lender to accept a Deed in Lieu of foreclosure:
The property must have been listed for sale and no reasonable offers have benen made even if they were below the listing price.
The property must be free and clear of any other liens and
judgments.
If the house is in probate the mortgage company may not want to
wait for the courts, because probate can average between 18-24 months to complete.
There has to be a verifiable hardship
You must provide Financial Documentation to prove that you can not afford the property
The property must be in default in order to work a Deed in Lieu
Title will be pulled to verify if there are any liens or judgments
On any loss mitigation case there must be an analysis
Deed in Lieu’s
An Appraisal is required to determine the value
The Unpaid principal balance is also a consideration
Lenders cost to do a Foreclosure is taken into consideration
Any Delinquent interest, a Auction/Sale Date
Escrow analysis
All of these items are taken into consideration when processing a deed in lieu and there must be a cost savings rather than going to an auction/sheriff sale because there is always a potential customer that could purchase at the sale. The lender by taking all these factors into consideration may decide to provide a loan modification San Diego program if this makes more sense than a deed in Lieu.
If a deed in Lieu makes sense from the lenders point of view then a a tactic that is being used by some lenders is to offer the homeowner some money to vacate the premises earlier. This tactic is also known as cash for keys. In some rare instances mortgage companies will pay the homeowner up to $ 3,000.00 for a deed in lieu. This way the lender can be reassured that the borrower will vacate the residence and the funds can be used towards locating alternate living space. This frees up the property for the mortgage holder/investor for a quick sale to get this off the lenders books.
