Advantages of a Deed in Lieu of Foreclosure

“Discover the amazing advantages of a deed in lieu of foreclosure, and how you might be able to set yourself free from your current foreclosure situation...”

 By Harry Faulkner

There are several advantages to a deed in lieu of foreclosure that you might consider if you find you are no longer in a position where you can afford the payments on your home.  The benefits include releasing the responsibility to the bank faster, avoiding foreclosure, and more.

When a deed in lieu of foreclosure occurs the borrower is immediately released from any personal indebtedness associated with the home.  When you agree to a deed in lieu of foreclosure you also avoid the public embarrassment that you foreclosed on a home.  This is a better option than foreclosing.

Many people opt to do a deed in lieu of foreclosure.  This process is when you sign the title of the home back over to the bank and no longer have to make the payments and the loan is forgiven in response to giving the home back.  If you are unable to make the monthly payments on your home you can consider this as an option.  However, the bank wants you to attempt to sell the home first.  The bank also wants you to try to do a short sale of the home also.  If you fail at the sale of the home and you fail at a short sale then you can transfer your property voluntarily back to the lender.  In most cases the debt and deficiency of the home will be forgiven.

The positive thing about a deed in lieu of foreclosure is that it doesn’t show as a foreclosure on your credit scores.  This is a good thing because it means you can buy another home in the future.  You cannot save your house but you will be able to buy another one.  You will also be able to avoid the long legal process of the foreclosure.  A foreclosure is a really bad strike on your credit.  The deed in lieu doesn’t look good on your credit but it is not as bad.

When you attempt to do a deed in lieu of foreclosure the lender or the mortgage company will require that the home has been up for sale and listed with a real estate agent for a minimum of 30 days.  There should be no liens on the property at all if you want to be approved.  Some mortgage companies also require that the home is vacant and that you are not currently living in it.  You might be required to get an interior appraisal of the home.  A deed in lieu may need to take place a certain time frame before the auction of the home also.  Some banks will allow for a deed in lieu to occur days before the auction while others require a 60 day time period.

If you are no longer able to make the payments of your home you might consider a deed in lieu of foreclosure.  This option is less damaging than a foreclosure and can take place quicker.  You are required to attempt to sell your home first before the bank will allow you to give the title to the home back.

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