When a property was purchased at a price beyond the current market value, it may not make sense to hold on to it. A deed in lieu of foreclosure allows you to be free of the property without the damage to your credit that foreclosure brings.
A deed in lieu of foreclosure is an alternative suggested by banks and the federal government for homeowners to give title to their property back to the lender. Often times, the lender will even entice wary homeowners by suggesting they may qualify of up to $3,000 in financial assistance for relocation and moving costs.
The unfortunate truth is that deeds in lieu of foreclosure are relatively rare and only available to homeowners that can demonstrate documented financial hardship. This means that if you can continue to pay the mortgage of the property, it is very unlikely that you would qualify for a deed in lieu of foreclosure under standard industry guidelines.
In a perfect world, the borrower and the lender would enter into a deed in lieu agreement that allows the property owner to voluntarily transfer the property to the lender. This may sound like an easy transfer, many unaware homeowners have completed deed in lieu transactions only to discover that they still owe money to the bank for the amount they were underwater on the loan.
If you are considering a deed in lieu of foreclosure, contact us today. We can advise you on whether this is or isn’t a good option for you as well as provide information about why a strategic default may be a better option than a deed in lieu of foreclosure.