What Is A Deed In Lieu Of Foreclosure?
I look at it as if you will consider giving a bank or a lender a deed in lieu of foreclosure; what are they going to do for you? It has often been known to happen that banks will pay an owner to move out and give an owner some compensation. Though, with a deed in lieu of foreclosure, the problem is if there are junior lien holders, the deed in lieu doesn’t get rid of them. The only way you can get rid of them is through a foreclosure sale. For the deed in lieu of foreclosure, the main problem there is it only works if there are no junior lien holders. If there are junior lien holders, they come along with it. The $64,000 question in considering a deed in lieu of foreclosure is what is in it for you as the owner? Is the lender offering you consideration to deed it the property. Something to think about.
Is It Ever A Good Idea To Just Simply Walk Away From A Mortgage?
That’s a tough one because it would all depend on the equity and what you may be walking away from. If there is no equity in the house and you have no intentions with it, why bother making payments? You are just enhancing the bank’s position. But you are better off going through a bankruptcy and walking away from it than walking away from it if the bank decides to pursue you and hold you liable for any post-foreclosure deficiency, which would be the difference between what the foreclosure sale brings in and what you owe the bank.
What Are Some Other Foreclosure Defense Strategies That Should Be Considered?
It’s tough. It used to be that if you were able to sign a purchase and sale agreement it could get the lender to back off. But these are different times. Dealing with lenders can be frustrating because you are dealing with faceless bureaucrats. Even then I deal with attorneys who represent mortgage companies, they have no discretion in what they do or don’t do. They are mere technicians, and it’s challenging. I used to call up a bank’s attorney and cut a deal, and now you have to go through a whole process. It is not very efficient or pleasant. If you manage to get a mortgage modification passed bank triage and into the lender’s system, they will hold things off. Ultimately, however, it comes down to your long-term view of what you are going to do with the real estate. Are you going to keep it? Are you going to sell it? If you keep it, will you have the financial wherewithal to continue making the payments both of the arrears and on the current mortgage? Is there equity in the place? Is it possible to refinance the mortgage? There was a time when banks would look at lending 80% of the value. Now, I have seen some of that stuff again. I have seen some new dock financings out there, haven’t yet seen the old we’ll lend you 125% of the value of your house. It may be tempting, but I believe avoiding a foreclosure is the best way to deal with it.
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