The deed in lieu of foreclosure is an instrument that conveys all interest in the property from the borrower to the lender (mortgagee) in order to satisfy a loan in default and avoid a foreclosure. You voluntarily transfer your property title to the lender in exchange for cancellation of the remainder of your debt.
The primary and most important advantage to the borrower is that it immediately releases them from most of the indebtedness involved with the loan and default. Another advantage to the borrower is that they avoid the proceeding and public notice of a foreclosure. Though you lose the home, a Deed in Lieu of foreclosure is much less damaging to your credit than a foreclosure. However, you will lose any equity you may have had in the property and you may face an income tax liability on the amount of debt forgiven.
Be Aware: Many lenders will not take a Deed In Lieu of Foreclosure. If other entities have liens on the property, giving the property back to the primary lender will not satisfy these liens unless you get your primary lender's agreement, in writing, to assume those obligations.
You will want to contact a Certified Public Accountant and a Real Estate Attorney as there may be tax and legal ramifications with a Deed in Lieu.
TAKE ACTION NOW and contact us today for your personalized foreclosure prevention consultation.
The information contained in this report is deemed to be accurate but is not guaranteed.
Sources: "The Foreclosure Bible" and the California Association of Realtors®