Qualifying for Deed In Lieu of Foreclosure

Question: We walked away from our house as we could no longer       afford it.  The interest rate on our mortgage was       unreasonably high by today’s standards and still our       bank was not willing to renegotiate the terms.        Therefore, we have been out of the house for several       months now.  At this point we would just like the bank to proceed with       foreclosure and take possession of the house, but       it’s not happening.  We heard about a process called “Deed in lieu of Foreclosure“.  How do we go about this or see if we qualify?

Response: Foreclosure is a complex, legal process. Just       because you stopped making payments and physically       walked away from the house does not mean that the bank       can just take the house away. The bank must initiate a       lawsuit and follow all the proper legal procedural steps       before it can get to the actual sale of your home. By       executing a            deed-in-lieu of foreclosure, you can expedite the       process. Essentially, by doing a deed-in-lieu, you are       transferring the title of your house to the bank, thus       avoiding foreclosure and all the fees and costs that the       bank accrues as a result of having to sue you.  However,       there may be tax consequences, depending on the value of       your home at the time the transfer takes place.       Generally, a deed-in-lieu is a better alternative than       foreclosure if you have no intentions to save your home.       As a side note, please take into consideration that if       foreclosure action would take place in New York, there       are mandatory settlement conferences in New York,       whereby banks are bound to negotiate with the borrower       in good faith, and it is oftentimes, easier to negotiate       with the bank and have the interest lowered than going       through the court process. Furthermore, it is important       to note that a deed-in-lieu still places the headache of       re-selling the property on the bank.  Therefore, the       lender might not agree to a deed-in-lieu unless the       homeowner has tried all other      loss       mitigation options first, such as      short sale.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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