Steps of Foreclosure

Deed In Lieu of Foreclosure

The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. One advantage to the borrower is that it immediately releases them from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the very public proceeds of a foreclosure and may receive more generous terms than they would in a formal foreclosure.

If you have been unable to make your monthly mortgage payments and have also been unsuccessful trying to sell your home at the market value, deed in lieu of foreclosure may be what is necessary to get you back on track. This procedure allows you to transfer your property voluntarily to your lender or mortgage company and your debt or deficiency is often forgiven. This will not save your home, but it will help you with your chances of getting another mortgage loan in the future and it will help you avoid the lengthy legal process of foreclosure. Although it is a negative strike on your credit rating, it is less harmful than a mortgage foreclosure.

Your mortgage company will typically require you to list your property with a Real Estate Agent for at least 30 days and that there are no other liens on the property. Some companies may also require that the property be vacant, have an interior appraisal of the property and that the deed in lieu of foreclosure process be completed a minimum of 60 days prior to a foreclosure sale.