Benefits
While a deed-in-lieu of foreclosure also affects your credit badly, the effect is less severe compared to a full foreclosure. A deed-in-lieu of foreclosure also allows you to walk away from your loan without having to sell your property yourself. However, lenders usually require that you try to put your property on the market for a minimum time period before agreeing to a deed-in-lieu of foreclosure. Depending on your negotiation outcome, your lender may agree to forgive any loan amount that the property sale doesn't cover.
Drawbacks
You may find it difficult to get your lender to agree to a deed-in-lieu of foreclosure because the lender then inherits any problems with the title of the property. By contrast, a foreclosure eliminates various title problems. Depending on your particular case, you may still be liable for any portion of the debt not covered by the property sale proceeds. If the lender forgives your debt, you may have to pay taxes on it.
Eligibility
You may have to meet several eligibility requirements before your lender agrees to a deed-in-lieu of foreclosure. Usually, the property has to be your principal residence and not an investment property. You must also provide proof, such as documents that relate to your income and expenses, to show that you are facing financial difficulties that make you unable to meet your loan obligations. You may also have to complete the deed-in-lieu of foreclosure within a certain time period after your loan becomes delinquent.
Cash for Keys
In some cases, your lender may be willing to provide you money to encourage you to vacate the property by a certain date. If you qualify for the government's Home Affordable Foreclosure Alternatives program, you can get $3,000 to help you move and re-establish yourself. You may be eligible for HAFA if your loan is guaranteed by Fannie Mae and Freddie Mac or your lender participates in the program.
No comments:
Post a Comment