charmgoodcredit Posted July 13, 2008 Report Share Posted July 13, 2008 What exactly is a deed in lieu of foreclosure? Does it mean that you give everything over to the mortgage company and walk or does it mean that you are basically renting the property from the mortgage company in the amount of your mortgage payment? I'm still researching it but thought I could get a quick informed answer from here. Any input would be helpful, about two months behind on mortgage and the payments just went up (ARM) about $250 Link to comment Share on other sites More sharing options...
swirlgirl Posted July 13, 2008 Report Share Posted July 13, 2008 Your lender would have to agree to do this. Here's a good article:http://www.articlesbase.com/real-estate-articles/how-does-a-quotdeed-in-lieu-of-foreclosurequot-work-398424.html Link to comment Share on other sites More sharing options...
charmgoodcredit Posted July 13, 2008 Author Report Share Posted July 13, 2008 Thanks I think we'll just add it into our bankruptcy if they decide not to work with us otherwise. For some reason I thought "deed in lieu of" was something easy for us.....silly me why would I ever think that the lender would make it easy for us. Link to comment Share on other sites More sharing options...
Recovering Attorney Posted July 14, 2008 Report Share Posted July 14, 2008 Remember that the law changed in December, and if you give the lender the property by deed inlieu and compromise the balance, you will not get a 1099. The change was made to make it easier for homeowners to deal with their banks. Many banks won't take a deed in lieu, as they don't want the property. You might want to ask a few reputable real estate brokers in your area if they do short sales. Link to comment Share on other sites More sharing options...
Denita Posted July 14, 2008 Report Share Posted July 14, 2008 Be very careful with a short sale. In our area we are flooded with short sale properties; however, the actual successful closing of a short sale transaction is less than 10%, in fact, it is closer to 6%. The banks/mtg companies say they want to cooperate - but they have not negotiated in good faith. What is happening is the seller has their property under contract with a valid buyer and a very extensive seller package is submitted to the lender (sellers current mortgage company) with the seller hardship information, seller financials, buyer contract and buyers' pre-approval - about 50 to 60 pages of documentation for the sellers lender to review. So far it takes months for the sellers lender to respond (average time is about 3 months - many have taken six to 9 months). Bottom line, after many months of negotiating with the loss mitigation dept, the sellers lender in most cases will not release the seller at the time of a short sale without the seller signing a note for the difference between the short sale amount and the outstanding balance owed! It turns out that the mortgage company makes more money by foreclosing on the property (they get rid of all the other jr lien holders plus they load up the property with default interest and penalties) In most cases the current lender is paid from the mtg insurance company 19% to 35% of the original mtg amount (depending upon when the mtg was originated) PLUS they get the proceeds from the sale of the house PLUS they get a deficiency judgment. We are finding that the lenders are very reluctant to accept a deed in lieu (almost will never take one here) and very reluctant to accept a short sale because they forfiet the proceeds from the mortgage insurance company in either one of those cases. The reason they take so long to respond (one of the reasons) is to prove to the mtg insurance co the property was marketed for xxx days so they can qualify for the mi payout. Sorry the answer is so long. But, if you are in a BK - negtiate with the lender for a new mtg amount/payment or let it go back - the other alternatives leave you holding the bag. Link to comment Share on other sites More sharing options...
Goose123 Posted July 14, 2008 Report Share Posted July 14, 2008 I agree with everyone else. My 2 cents - you live in Michigan so your lender probably has more bank owned properties than they ever dreamed of. The last thing they want is another house. Hopefully that gives you some room to negotiate.Did you make all of your payments before the ARM reset? If that is what caused you to get behind, you probably qualify for an FHA Secure mortgage.Good Luck Link to comment Share on other sites More sharing options...
2ndTimeAround Posted July 18, 2008 Report Share Posted July 18, 2008 What exactly is a deed in lieu of foreclosure? Does it mean that you give everything over to the mortgage company and walk or does it mean that you are basically renting the property from the mortgage company in the amount of your mortgage payment? I'm still researching it but thought I could get a quick informed answer from here. Any input would be helpful, about two months behind on mortgage and the payments just went up (ARM) about $250A deed in lieu of foreclosurer (exactly what it says), this is where you give the title back to the bank and walk away for the property. The only benefit is, it will not destroy your credit report as much as having a foreclosure listed... Link to comment Share on other sites More sharing options...
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