If you’ve gotten behind on your mortgage payments and are facing a foreclosure, you’ve probably started researching whether there are any potential alternatives available to you. You might have come across an option known as a deed in lieu of foreclosure. Before discussing the advantages that a deed in lieu offers over a foreclosure, it helps to understand exactly what a deed in lieu is.
What Is a Deed in Lieu?
The phrase “deed in lieu” describes a transaction where a homeowner transfers title to the bank, and in exchange, the bank releases the homeowner from his or her mortgage obligation. When deciding whether to pursue a deed in lieu, you should consider whether there are any other liens on the property at issue. If there are, it could make it harder for you to obtain approval from your bank, since any additional lienholders would also have to agree to the arrangement.
The Advantages of a Deed in Lieu
One of the major benefits of completing a deed in lieu is that it spares you from having a foreclosure listed on your credit history. It’s important to note that a deed in lieu will still have a significant negative impact on your credit score, as the FICO scoring system treats foreclosures and deeds in lieu the same way. However, because potential lenders typically consider more than just a credit score, it could benefit you to not have a foreclosure included on your report.
In some cases, the bank might even offer you a cash incentive to complete a deed in lieu (commonly referred to as a “cash for keys” program). Although the amount of cash varies from case to case, it’s often thousands of dollars, which could help you get on your feet again. A deed in lieu generally benefits the bank as well as the homeowner, since it spares the bank from having to go through with the foreclosure process, so it makes sense that banks would be willing to offer an incentive to homeowners to complete this more time- and cost-efficient alternative.
The bank might also allow you to continue living on the property for longer than you could with a foreclosure. What’s more, you might be able to negotiate with the bank to either reduce the mortgage deficiency or forgive it entirely. If the bank agrees to do so, you’ll need to make sure that the deed in lieu paperwork specifies that the debt is fully satisfied.
Experienced Foreclosure Defense Attorneys Serving the Tampa Bay Area
If you decide to pursue a deed in lieu, you’ll want to hire a qualified foreclosure defense attorney, since the process to obtain one can be quite complicated. Fortunately, if you’re in Pasco County or Hernando County, you can turn to the skilled advocates at The Lyons Law Group, P.A. We’ve been serving clients since 2008 and we have extensive experience facilitating deeds in lieu and negotiating waivers of deficiency and cash for keys settlements. Contact us today to schedule an initial consultation.