A Deed in Lieu of Foreclosure

A Deed in Lieu of Foreclosure

Just the word foreclosure is enough to strike fear into the hearts of homeowners. The idea of losing the place we call home because we have fallen behind on our mortgage payments is terrible. If you are facing foreclosure, another way to avoid foreclosure is to seek a Deed in Lieu of Foreclosure

A Deed in Lieu of Foreclosure

If you cannot get a loan modification and/or your mortgage lender has rejected a short sale, you may want to consider a deed in lieu of foreclosure. A deed in lieu of foreclosure is best used under the following conditions:

  • The fair market value of your home is less than the amount you still owe.
  • You are not able to pay off the mortgage debt. 
  • You don’t have much home equity, your financial situation is not looking good, and you want to minimize your loss as much as possible. 
  • You’ve tried refinancing in good faith, and you’ve talked to a housing counselor.

A deed in lieu of foreclosure takes place when you voluntarily sign the deed to your home back to the lender. It seems like an easy option to avoid foreclosure, but lenders rarely grant it because they bear too much legal risk that the borrower can sue them later. Yet, during the housing collapse from 2006 t0 2008. “Jingle Mail” was common. Owners simply put the keys to their house in an envelope, mailed the envelope to the lander, and drove away.

A deed-in-lieu of foreclosure may help you avoid being personally liable for any amount remaining on the mortgage.

Nebraska Is a Deficiency Judgment State

Borrowers considering a deed-in-lieu of foreclosure should ask their lenders or servicers about help with their relocation expenses through private programs. If you live in Nebraska, you are responsible for any deficiency, which is a difference between the value of your property and the amount you still owe on your mortgage loan. You will want to ask your lender to waive the deficiency. If the lender waives the deficiency, get the waiver in writing and keep it for your records.

To avoid a deficiency judgment with a deed in lieu of foreclosure, the agreement must expressly say that the transaction is in full satisfaction of the debt. If your deed in lieu of foreclosure agreement does not contain this language, the bank may file a lawsuit to get a deficiency judgment against you.

If a bank already has a deficiency judgment against you and you want information about whether you can get rid of (discharge) your liability for the debt by filing for bankruptcy, consider talking to a bankruptcy attorney.

FREE information on How to sell your house fast

Styl Properties, Inc. is here to help homeowners out of any distressed situation.  

As investors, we are in business to make a modest profit on any deal. However, we can help homeowners out of just about any situation, no matter what!  There are no fees, upfront costs, commissions, or anything else.  We offer the simple truth about your home and how we can help you sell it fast.

Give us a ring. We would love to help you understand the process and to answer all of your questions. You can reach us at 402 999.0577

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