Deed in Lieu of Foreclosure is defined by Wikipedia as a deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.

Deed in Lieu of Foreclosure offers several advantages for both the borrower and the lender.

• The principal advantage to the borrower is that it immediately releases him/her from most or all of the personal indebtedness associated with the defaulted loan.
• The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he/she would in a formal foreclosure.

As you might guess, it is not that simple.

The bank has to be willing to take the home back, and different banks have different guidelines.

• For example, according to HUD’s website, they won’t consider the program for an FHA loan for an investor or for a home that is vacant (in most cases).
• Other banks won’t take the house unless it is a last resort (if you have tried to sell it and can’t) or won’t take the home unless they are sure it will cover your entire debt.
• The bank won’t consider a deed-in-lieu if you have more than one mortgage on the property.

As with every other option during such a confusing time, it is best to talk to experts in your area. Deed-in-lieu may not be right for you — but there are plenty of other options out there!

How About One Of These Homes?

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All statistics are gathered from the Buffalo Niagara Association of REALTORS®.

For more information – call our Myriad Team @ Keller Williams Lancaster at: (716) 650-0051

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