Facing foreclosure is a distressing prospect for any homeowner. Avoiding it is of paramount, but to do that you need to be aware of all of your options. One of the options available to you is entering into a deed-in-lieu of foreclosure agreement. Even if you have defaulted your mortgage payments a number of times, you can still avoid foreclosure with sound legal advice. Read on to find out what deeds-in-lieu of foreclosure are, what the process is and how we at Gary I. Handin P.A. can be there for you.
What Are Deeds-In-Lieu of Foreclosure?
A deed in lieu of foreclosure is the process by which a home owner voluntarily transfers ownership of their home to their lender in exchange for being released from their mortgage obligations. In this transaction, conveying the title of your home to the mortgage servicer will discharge you from your debt. Once your lender accepts the transfer of title, they will become responsible for all debt and judgments against the property.
What Is The Deed-In-Lieu Of Foreclosure Process?
- Request a Loss Mitigation Application
To obtain a deed in lieu of foreclosure you, the borrower, will need to request a loss of mitigation application from your lender. Your application will include all relevant information regarding your income, monthly expenses and proof thereof.
- Selling Your Property
Your lender might not accept your deed-in-lieu application the first time. Often lenders require that you list your home before the submission of your application. You may be required to provide your lender with proof of your attempted sale by means of a listing agreement.
- Successful Application
Once your application is successful, you will be provided with various documents to sign. The documents will set out the details of your agreement with the lender. It will also include conveyancing documents to transfer ownership of the property from you to the lender. It is of utmost importance that you understand the agreement before you sign. Legal terms may be complicated, but with a lawyer by your side you cannot go wrong.
Entering into a deed-in-lieu of foreclosure agreement requires legal knowledge. It would be in your best interest to get a legal representative that is seasoned in this field of law and that can provide with you best possible options during this process.
Will A Deed-In-Lieu Of Foreclosure Affect My Credit Score?
Foreclosures are associated with poor debtor-creditor relationship. Once your property has been foreclosed, you may see a several 100 point drop in your credit score. The foreclosure will remain on your credit history for 7 years. When applying for future loans, you will have to disclose that you have had a property foreclosed upon. You would be eligible to buy a home in 5 years with some restrictions and in 7 years’ time you will be eligible to purchase a home free of restrictions.
The effect of a deed-in-lieu is not specifically clear and the effect thereof is somewhat subjective. Generally, people report a drop of around 85 to 160 points to their credit score. A deed-in-lieu might be better because some lenders as it may display a greater sense of financial responsibility and willingness to pay off debts sooner rather than later.
Your lawyer will need to draw up a deed-in-lieu of foreclosure on your behalf. The deed must contain all the legal details to ensure the successful conveyancing of the property. Contact Gary I. Handin, PA., today to discuss your options, we will ensure that all your options are considered and pursued. We will also draw up the deed-in-lieu of foreclosure agreement and ensure that your legal interests are protected throughout the transaction.