Friday, December 12, 2008

Deed-in-Lieu of Foreclosure

Another option available to avoid a traditional home foreclosure is to voluntarily transfer your property to your mortgage lender. This is called a Deed-in-lieu of Foreclosure. It will not save your home but it will immediately release you from most or all of the debt associated with your defaulted mortgage. You would avoid the public humiliation of a foreclosure proceeding and you may receive more generous terms.

If you have been unsuccessful in making your monthly mortgage payment or trying to sell your home at a decent price, this option may be helpful to your situation. Avoiding a public foreclosure proceeding may help you in your efforts to obtain a mortgage in the future. It is still a negative strike on your credit but does not do as much damage as a home foreclosure.

It most cases your lender will require you to list your home with a real estate agent for 30 days and that your property be free of other liens. You more than likely will have to vacate the home as well. Your lender may require an appraisal of the property to determine the current market value.

We have created a sample document for a Deed-in-Lieu of Foreclosure to help guide you through this process. We do advise you to seek legal advice before entering into any contracts.

Next Article: Homeowners in Mortgage Trouble