Foreclosure Alternatives: Deed-in-Lieu of Foreclosure
A Deed-in Lieu (DIL) of Foreclosure is sometimes referred to as a “friendly foreclosure” since the homeowner essentially gives the Deed back to the bank. Because this may prevent the bank from go through lengthy (and costly) foreclosure proceedings, they will sometimes forego their right to a deficiency judgment. The bank agrees to take the Deed back in exchange for the property and the homeowner and back part ways with no further recourse.
This solution often only works when there is only one bank holding a note on the property and there are no significant junior liens on the property. If the homeowner has equity, this is usually not a good route to take. Why forfeit your right to that hard earned equity?
As with other foreclosure alternatives, the bank will only accept a DIL if you cannot make your mortgage payments. Also like the other alternatives, it is often less damaging to your credit than a foreclosure. Keep in mind, the bank will not present this as an option to you because this has to be done by you voluntarily. To maximize your chances of your lender accepting a DIL, do not wait too long – approaching them one week before the home is to be auctioned will often not work.
If you or someone you know is falling behind on their mortgage, please call me at 703-403-0536 or email me at patrick@patrickduffyrealtor.com. I’m here to help!
Links:
Deed-in-Lieu of Foreclosure: http://banking.about.com/od/loans/g/deedinlieu.htm
Deficiency Judgment: http://dictionary.reference.com/browse/deficiency+judgment
