Foreclosure Lawyer

Deed In Lieu Of Foreclosure

What is a Deed in Lieu of Foreclosure?

If you reach the point where you are willing to simply hand over ownership of your house to your lender and have your loan canceled in exchange, you can propose a deed in lieu of foreclosure. If your lender accepts your proposal, your property deed will be given to your lender and your lender will no longer seek to foreclose on your home. 
 

Can I Propose a Deed in Lieu of Foreclosure Even if my House is Already in Foreclosure?

Yes, and if your lender accepts your proposal after a foreclosure has already been initiated, the lender would reverse your foreclosure. 

How Would This Benefit me?

The benefit of filing a deed in lieu is that you no longer have the burden of selling your house because the lender will do it for you.
 

Why Don't Most Lenders Want a Deed in Lieu of Foreclosure?

Getting a lender to accept your deed in lieu of foreclosure may be a difficult task with the current economic condition. Most lenders already have a large number of houses which they are unable to sell at foreclosure auctions, so they would prefer cash instead. However, the bank will usually consider the cost of foreclosure against the risk and profit that could be made on your home. Typically a lender would require you to put your home on the market for at least 3 months before accepting your proposal. Most banks would prefer you sell your house rather than having to do it themselves.

The reason being is lenders focus primarily on lending and when real estate sales are involved they have to contract with real estate companies, which of course cuts into their profit. If you have a lien on your mortgage or if you have multiple properties a deed in lieu of foreclosure will not be granted. For the lender to accept your proposal you must have a clear title for the entire property.