The rough economic times has taken its toll on many households. People have experienced job loss and periodic layoffs while companies try to reduce labor to stay in business. This has led many homeowners to lose their home due to foreclosure. The result is a devastated credit record. Because of this a lot of homeowners are using deed in lieu foreclosure to try and salvage their credit rating.
Deed in lieu is where the homeowner will hand the deed to the home over to the mortgage holder. They then walk away from the home and the mortgage loan. The lender can then put the property on the market to recoup their investment.
Anytime you deal with a lender, it is essential to have every agreement in writing. If you agree to something it must be put down in writing or it will not stand up in court if either party goes back on their word. In many instances the lender will not hold the homeowner responsible for any shortfall in the sale price of the house.
Most of the time, the consumer will be held responsible for the actual selling of the home. They will have to find a buyer or work through a realty company to find someone to take over the property. A mortgage lender considers it an inconvenience to sell a home. They are only in the finance business.
This type of arrangement is only possible if you have one mortgage. Having multiple mortgages or tax liens on the property can render this strategy useless. This is because there would not be enough equity in the home to pay multiple mortgages. This includes any home equity loans you may have procured on the property.
Finally is the decision of the mortgage holder which is final and binding. Whether they choose to allow you the option of deed in lieu of foreclosure remains to be seen. If you have been paying on the home and been a good customer for any length of time they should be more than willing to work with you.
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