Featured News 2012 What is a Deed-In-Lieu of Foreclosure?

What is a Deed-In-Lieu of Foreclosure?

When money is tight and you can't pay your mortgage, people often look to foreclosure as the only way out. This sorrowing act means that occupants will lose their home in exchange for relief from mortgage debt. While this is sometimes the best way to remedy a financial disaster, there are other options to consider. A Deed-in-Lieu of foreclosure is a possibility that requires sacrifice, but may allow you to remain in your home. In this negotiation, the homeowner voluntarily transfers the ownership of the property to the owner of the mortgage. In exchange for the title, the mortgage company releases that person from all mortgage loan payments.

According to the famous mortgage company, Fannie Mae, only some people are eligible for a DIL. Oftentimes people who cannot refinance or modify their mortgage are in a place to consider this option. Also, homeowners who are facing long-term hardship with no alternative way out may want to transfer their title deed to the mortgage company. People who are behind on their mortgage and are getting calls from creditors will want to think about this alternative. When a property owner owes more on their home than it is worth, and doesn't want to sell the home, this may be a good way to avoid serious financial consequences. DIL's also aid men and women who are trying to sell their home but cannot do so.

According to the Bank of America Eligibility standards, people are eligible for a DIL if they are going through a financial hardship such as a divorce, job loss, or medical emergency. If the person is not able to afford the current mortgage payment, or cannot modify the current mortgage to make it manageable, then he or she can obtain a DIL. If the property owner has been trying to sell property at a fair market value with a licensed real estate agent for at least three months, and has not been successful, then he or she is eligible for a DIL. Other banks have similar DIL qualifications, but you will want to contact your mortgage lender to learn their specific list of prerequisites before you request a DIL.

The U.S. Department of Housing and Urban Development declares that a deed-in-lieu must be completed within 90 days of initiation. This way, a DIL can help you to get rid of your piling mortgage debt quick. Effective since the Mortgagee Letter 2002-13, the HUD will allow up to $2,000 to pay off second liens when trying to determine whether or not a mortgagor is eligible for a DIL. The funds can help a struggling family to pay off junior liens, or they can be given to the mortgagor when/if he or she leaves the home. Some banks and mortgage companies will also give their clients' money to help with relocation expenses, or thousands of dollars to settle home equity loans, lines of credit, or other pressing financial obligations.

If you have already conceded to a foreclosure, and then discovered that you are eligible for a DIL, you may have the right to reverse your foreclosure before it is official and take this option instead. People who want to erase their decision to foreclose will need to follow the process laid out in the mortgage company's Quality Control Plan. Once the DIL is official, the home loan is over. This means that you are no longer the owner of your property, but you have effectively gotten rid of the financial pressures that were such a burden. Oftentimes banks will still allow the former property owner to remain in the home. To learn more about deed-in-lieu of foreclosures, contact your mortgagee and discuss the process.

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