Foreclosure Option 5: Deed in Lieu of Foreclosure
Selling your home is a good option to explore if you want to avoid foreclosure. But considering that the market is currently unbalanced, with more supply than the demand, it is not surprising that you will be unable to do so.
In this case, you can speak with your lender regarding the possibility of a deed in lieu of foreclosure option.
This particular option is actually ideal for owners who have very little equity left on their properties. There are some instances when they actually owe a little bit more than what their homes are worth. In these cases, lenders are most likely to agree to a deed in lieu of foreclosure.
The reason why lenders usually agree to this proposal is simple. They will be able to avoid the costs that go with the filing of foreclosure. Of course, the lenders will have to see that the borrower made a sincere effort to sell off the property. Also, most lenders only accept ‘unavoidable hardship’ as the reason behind the delinquency.
If the lender agrees to a deed in lieu of foreclosure, you will simply need to hand over the title of deed of your home and you will be released from your home loan obligations. Any deficit will be forgiven.
The only disadvantage is that the transaction will appear of your credit record. But compared to having a foreclosure entry, this is certainly better.
Again, in order to avoid foreclosure by exploring this option, you will need to speak with your lender. You must be able to justify why this option is best for all parties concerned by bringing with you all relevant financial documents. Keep in mind that you can not force a lender to accept this option. And so, you must work very hard to present your case.
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