Every day, responsible, hardworking, reliable homeowners face financial difficulty and potential foreclosure. The loss of a job, unexpected medical bills, divorce, and several other situations can cause good people to miss their mortgage payment, resulting in foreclosure—a frightening situation for any homeowner.
Foreclosure is costly and stressful and rarely brings good results for the homeowner or the lender. However, there may be another option.
A “deed in lieu of foreclosure,” often shortened to “deed in lieu,” is usually the best option for everyone involved. It can free you from the financial responsibility of making mortgage payments, and the lender can take possession of the property without the lengthy and costly foreclosure process.
If you simply can’t make the mortgage payments, a deed in lieu is beneficial for both you and the lender, but it must be done with the guidance and support of a deed in lieu attorney.
A deed in lieu is the relatively simple act of giving your real estate property to the lender. It’s a formal, legally-documented agreement where the lender takes the property and frees the homeowner from their mortgage responsibility. Unfortunately, the homeowner has to move out and no longer the owns the house, but it saves the long, expensive, drawn-out process of going through a foreclosure, freeing the homeowner from a mortgage they can’t afford.
This is preferable to a complete foreclosure. Foreclosures take time and require the lender to sell the property at an auction, where it likely won’t go for full market value. It may not even fetch a high enough price to cover the mortgage balance. It’s costly, timely, and stressful for everyone involved, making a deed in lieu of foreclosure a preferable option in many situations.
The main benefit is that you are released from personal responsibility with the mortgage loan. It also helps you avoid a public spectacle of a foreclosure and the property auction, and you’ll likely get more generous terms, especially if you work with an experienced attorney.
A deed in lieu won’t affect your credit as much as a foreclosure, and you also won’t be responsible for selling the house.
The benefits of a deed in lieu make it a much more preferable option.
Unfortunately, there could be negative tax consequences if you perform a deed in lieu, and some lenders will want cash instead of the property, which will further complicate the process.
Additionally, you may not qualify for a deed in lieu if the home has a second mortgage, home equity loans, or a tax lien.
The mortgage company has a team of legal professionals on their side; make sure you have the same advantage by hiring an experienced deed in lieu attorney.
If you are facing foreclosure, an experienced attorney can help you understand the pros and cons of a deed in lieu process. In many cases, a knowledgeable attorney can get the lender to forgive the entire mortgage balance—better than having just a portion forgiven, meaning you lose the home and still owe money to the lender.
Contact the Messina Law Group today if you are facing a potential foreclosure. Our knowledgeable and experienced team will help you navigate the complex deed in lieu process, regardless of your financial situation.