How to Use a Deed in Lieu of Foreclosure in Fort Lauderdale

While it may not seem like it, you have a lot of options when facing foreclosure, and a deed in lieu of foreclosure is one of them. A deed in lieu of foreclosure will allow you to avoid foreclosure, while still freeing yourself from the mortgage payments you are unable to afford. Instead of waiting for the lender to foreclose on your home, you simply sign off on the deed and voluntarily transfer ownership of the home to your lender. If you are facing foreclosure in Fort Lauderdale, it is important to know your options. Below are the basics of using a deed in lieu of foreclosure.

How Does a Deed in Lieu of Foreclosure Work?

If you want a deed in lieu of foreclosure, you will have to work with your mortgage lender to get it. Every lender sets out their own requirements for this so, you will need to ask them what their process is. You should explain that you are unable to make payments, but that you would like to avoid foreclosure.

While the process will vary lender by lender, there are some aspects of the process that are fairly common. These are as follows:

• Call your lender and ask to start the deed in lieu of the foreclosure process. They may ask you to fill out an application, which may include providing details about your finances, including your budget and monthly payments.
• Gather important documentation that will help you prove your financial hardship to your lender. These documents may include pay stubs that show your income, utility bills other invoices that show your monthly expenses, and bank account statements.
• Once you have spoken to your lender and asked about a deed in lieu of foreclosure, you have to be patient and give your lender time to respond. You will likely have to wait at least 30 days before hearing back from your lender, and perhaps even more. You can call to ask for a status update, but also be aware that you will likely have some waiting to do. Any time your lender asks you for additional information, provide it as quickly as possible to reduce the waiting time.
• If your deed in lieu of foreclosure is approved, you should speak to a foreclosure defense lawyer who can help you through the rest of the process. Ideally, you should speak to a lawyer even before you speak to your lender, as they can provide you with sound legal advice from the very beginning of your case. A lawyer can also try to shield you from a deficiency judgment, which could cost you thousands of dollars at a time when you can ill afford it.

Pros of a Deed-in-Lieu of Foreclosure

There are many pros of obtaining a deed in lieu of foreclosure. These include:

• You may qualify for relocation assistance: Moving is expensive, and you will face increased costs just to move out of your home, at a time when you are already experiencing financial trouble. However, by saving your lender from the hassle of foreclosure, you are also saving them time and money. That may give the lender an incentive to provide you with up to $3,000 in moving expenses if you leave the home in a timely manner and leave it in good condition.
• You may be able to purchase another home sooner: If you allow your home to foreclose, you may have to wait many, many years before you qualify to purchase another home. A deed-in-lieu of foreclosure though, can stop foreclosure from occurring. The deed-in-lieu of foreclosure will still remain on your credit report for up to seven years as a debt you owed and did not fully repay. Still, you may qualify to purchase a home sooner. If you want to qualify for a conventional mortgage through Fannie Mae, you may be eligible within two years of completing the deed-in-lieu.
• You can save money: If your lender forecloses on your home, they may also pursue a deficiency judgment, which would make you responsible for paying the difference between what is still owed on the loan and what was recovered at the short sale. With a deed-in-lieu of foreclosure, your lawyer can draft an agreement in which the lender waives their right to pursue a deficiency judgment.

While a deed-in-lieu will bring many benefits, there are also some potential downsides you should consider.

Cons of a Deed-in-Lieu of Foreclosure

A deed-in-lieu of foreclosure will save you from an actual foreclosure, but that does not mean you will walk away from your home free and clear.

There are some disadvantages a deed-in-lieu of foreclosure will bring, and they are as follows:

• You will lose your home: Although a deed-in-lieu of foreclosure will stop the foreclosure process, and many negative impacts that come along with it, the process will still result in you losing your home.
• There are tax implications: If the debt forgiven on your home totals more than $600, which is likely, that forgiven debt is treated as taxable income and you must report it within your tax return.
• Your credit will take a hit: A deed-in-lieu of foreclosure will not remain on your credit report as long as a foreclosure, but it will still show up on your report. That will make it more difficult for you to obtain a loan or any kind of credit in the future.

Call Our Debt Defense Lawyer in Fort Lauderdale Today

If you are facing foreclosure and want to learn more about the deed-in-lieu of foreclosure, or other options, our Fort Lauderdale debt defense lawyer at Loan Lawyers is here to help. Call us today at (954) 523-4357 or contact us online to schedule a free consultation and to obtain the sound legal advice you need during this difficult time.