I need some information on(A deed in lieu of foreclosure)

After being on a home mod trial for over a year, we have been declined . We were told by BofA that we must sell the house first before we can be considered for a (DEED IN LIEU  OF FORCLOSURE) We have been told by other people that we shouldn't have to sell frirst.  We would like to hear from anybody who has been  through this or knows something about this.  T HANK YOU
  • November 14 2010 - Reno
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Answers (4)

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Profile picture for jamieson79
Hi Shasta Steve is correct, they will not consider you for a deed in lieu until you have tried a short sale, and truthfully a short sale is a 1000 times better for you then a deed in lieu.  With a short sale you don't have to worry about paying taxes on the deficient amount (if this is your primary residence and you never took cash out of your second loan) you are protected by the mortgage debt relief act of 2010.  Your credit will rebound in about 18 months (short sale is not recorded on your credit report, just the late payments leading up to the short sale) and third and most important we can give you protection from the deficiency judgement in a short sale.  Say you own 300K and your home and we sell it for 200K the left over 100K would be your deficient amount.  If you just walk away from your home the bank has 6 months to pursue you for a judgement forcing you to pay back the 100K, however in a short sale we make sure the lender forgives the entire amount and you can walk away free and clear.  Alfo the service is completely free to you, the Realtors commissions and closing costs are completely paid for by your lender and in some cases we might even be able to get you 3,000 cash at the close of escrow to help you move through a program called HAFA.  If you have any other questions or want to get the ball rolling give me a call at 775-359-0909x110 or email kylekrch@krchrealty.com you can also check out my web videos at www.krchrealty.com\help
  • November 15 2010
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Hi David,

Bank of America has recently changed their internal guidelines to mirror all of the HAMP and HAFA guidelines.  Under their guidelines, they require that you place the home on the market and attempt to sell your home as either a short sale, or a pre-foreclosure sale.  If you are unable to procure an acceptable offer after 120 days, you would then be eligible to apply for their deed-in-lieu of foreclosure program.

In addition:  As long as Bank of America agrees to forgive your remaining debt and not pursue you for a deficiency judgment, then I would agree with Kyle that you would be better off successfully selling the home as a short sale rather than pursuing a Deed-in-lieu of foreclosure. In terms of how your credit will be affected and your future buying ability, we have been informed that a deed-in-lieu of foreclosure is viewed just the same as a foreclosure itself.

  • February 17 2011
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Profile picture for wetdawgs
Hmmm, that is confusing.  If you sell the house you can't do a deed in L of F because it wouldn't be your house so you couldn't sign over the title to the bank.   Perhaps they mean that you must have made an honest effort to sell the house in a short sale situation?

Elizabeth of about.com's homebuying/selling site describes a deed in L-o-F here.    A lender doesn't have to accept a D-i-L-o-F.
  • November 14 2010
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Profile picture for shasta_steve
What they are most likely telling you is you need to list your house for short sale first.  If you are unable to sell it then they might consider a deed in lieu.   Deed in Lieu's sound like a great thing but the problem is they are almost never granted.  What most people do not realize is the bank rarely owns the loan and is usually just servicing it.  To be honest with you I think your chances are slim to none getting a dead in lieu without signing paperwork saying you are liable for part of the mortgage.  Nevada is a recourse state and they will not just let you off that easy. 
  • November 14 2010
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