What Is a Deed in Lieu?
Property owners who negotiate a deed in lieu with their mortgage lender do vacate the home. But instead of a lender foreclosing and evicting residents, owners who face imminent risk of foreclosure can speak to their lender about a deed in lieu and sign over the property to the lender before they take action. Qualifying for a deed in lieu involves meeting a certain criteria, and those who qualify can sign over the deed to relinquish their rights to the home and walk away from the mortgage loan.
Discuss Efforts to Sell
Mortgage lenders need to know specific information about the property before they can agree to a deed in lieu. For example, in the case of Bank of America, deed in lieus are only considered after a property hasn't sold in 90 days. If approaching your lender about signing over the deed, inform them of all efforts you've made to find a buyer for the property. Did you attempt to sell the home yourself, or did you use a real estate agent? How long was the property on the market? Did anyone show interest in the home?
Explain Economic Hardship
Not everyone can submit a request for a deed in lieu of foreclosure. Talk to your lender and discuss financial or economic hardships that prevent you from making timely mortgage payments. Lenders will inquire about the situation; and the more information you provide, the better. Be honest, but don't falsify or exaggerate your circumstances to sway your lender's decision. Mention any reduction in income, job loss, illness or other personal issues that created mortgage payment problems.
Plans Upon Vacating
It can take several weeks or months to approve a deed in lieu, but before you submit your request for help, talk to your mortgage lender about your plans for vacating the home. If approved, lenders typically allow up to 30 days to vacate the property, and some assist owners with relocation costs. Depending on the home loan lender, you may receive permission to temporarily live in the house for a longer period after you sign over the deed, and then lease back the property at a reduced price.
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