Deed In Lieu Of Foreclosure
by Cindy from USA
Ask Kate About Deed In Lieu Of Foreclosure: Hi Kate, My house is up for sale because I have to move by this summer. What if my house doesn't sell by the time I have to move? Everyone is giving me advice but I don't want to rent it.
To rent the house is not an option! What do I do if I just want to call the mortgage company and tell them they can have it back? What would happen exactly? Cindy
Kate Answers: Deed In Lieu Of Foreclosuree
Dear Cindy, When homeowners contact their banks to voluntarily turn over the ownership of houses, it is commonly called Deed In Lieu Of Foreclosure.
However as cooperative as it seems, homeowners' credit histories are still adversely affected for years.
Please be advised with Deed In Lieu Of Foreclosure, you could also suffer tax consequences. So I strongly advise seeking counsel before you choose this route.
Foreclosure vs. Deed In Lieu Of Foreclosure
Foreclosure is different from Deed In Lieu Of Foreclosure. Please understand, I am advocating neither, only explaining the difference of action taken on the part of homeowners.
In the case of foreclosure, when homeowners stop making monthly house payments, banks will make contact. In fact, after missing only three consecutive payments, the process of foreclosure is initiated.
But as odd as it sounds, banks are behind schedule lately. The lending institutions are under a deluge of paperwork due to the onslaught of foreclosures. So time frames may vary.
Foreclosure should be a last resort. It is damaging to credit history and as with Deed In Lieu Of Foreclosure, could have tax consequences as well.
Be aware the state in which your house is located may have different governing laws in place to protect the rights of both homeowners and banks in the case of foreclosure and Deed In Lieu Of Foreclosure.
Mortgage Loan Modification
Please do not think I am experiencing poor reading habits when I ask this. I truly did read that you do not want to rent the house.
Have you considered a mortgage loan modification
to reduce the monthly house payments equal to the amount you could charge for rent? (Assuming your payment is higher than the going rents in your area.)
That way the house payment would be more affordable and you could preserve your credit.
I mention this because losing a home can be rough on a homeowner's emotional well-being. So even though you may wish to be relieved of the obligation, I encourage you to continue investigating options to save your home. I welcome more questions from you.
PS Remember, if you still have questions regarding Deed In Lieu Of Foreclosure, write me at Ask Kate
where every question is a good question.
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