Although Deeds in Lieu have been around for quite some time, they have recently become a big hit amongst lenders in the last year. Deeds in Lieu offer what is usually a more speedy and less complicated process than that of a loan modification or a short sale. Most of the time the process is finished in 30 to 45 days; isn’t that quick?
A Deed in Lieu is simply a Deed in Lieu of Foreclosure, which means that it’s as simple as the home owner (at risk of foreclosure) transferring the deed to the home back to their lender. Many homeowners at the point of foreclosure are simply ready to just walk away from the house. Instead of ceasing payment, dealing with a short sale or loan modification the owner can simply walk away without paying a dime. In fact, in some instances the lender may pay the owner an incentive ($3,000 -$15,000) to use a Deed in Lieu.
While the process and incentives are appealing, Deeds in Lieu won’t work for every owner. They typically will not work for owners that have more than one mortgage. Also, if there is equity in the property, it may be more beneficial for an owner to attempt a loan modification first. Also, the owner should consider that the Deed in Lieu is treated the same as short sales by credit scoring agencies. This means that the account would then show “not paid as agreed” on their credit report.
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