Deed In Lieu Of Foreclosure

Julie — Thu, 28 May 2009 23:54:11 +0000

Deed in Lieu Of Foreclosure, Mortgage Foreclosure Appraisal, Mortgage Refinancing

For the purposes and discussion of the topic about Deed in lieu of foreclosure, I took the liberty of copying from the Wikipedia to have a clearer meaning and understanding of the definition. It is very important to know and understand these types of deed when you encounter such predicament so you can make a sound and informed decision. If you read the entire article, you will be amazed to learn a lot of things that you can do before a foreclosure takes its ugly head. This deed in lieu of foreclosure will protect and have advantages for both the lender and the borrower. It would be very beneficial to the borrower since it will release him or her form the indebtedness and can start the negotiations with the lender and in most cases the borrower will gain more.

This entire article is taken from Wikipedia:

March 25, 2008-03-25

A Deed in lieu of foreclosure is a deedinstrument in which a mortgagor (i.e. the borrower) conveys all interest in a real propertyto the mortgagee (i.e. the lender) to satisfy a loan that is in defaultand avoid foreclosureproceedings.

The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The principal advantage to the borrower is that it immediately releases him/her from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he/she would in a formal foreclosure. Advantages to a lender include a reduction in the time and cost of repossession, and additional advantages if the borrower subsequently files for bankruptcy.

In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured bythe real estate being transferred. Both sides must enter into the transaction voluntarily and in good faith. The settlement agreement must have total considerationthat is at least equal to the fair market valueof the property being conveyed. Generally, the lender will not proceed with a deed in lieu of foreclosure if the outstanding indebtedness of the borrower exceeds the current fair market value of the property.

Because of the requirement that the instrument be voluntary, lenders will often not act upon a deed in lieu of foreclosure unless they receive a written offer of such a conveyance from the borrower that specifically states that the offer to enter into negotiations is being made voluntarily. This will enact the parol evidence ruleand protect the lender from a possible subsequent claim that the lender acted in bad faithor pressured the borrower into the settlement. Both sides may then proceed with settlement negotiations.

Neither the borrower nor the lender is obliged to proceed with the deed in lieu of foreclosure until a final agreement is reached.

As you read through the article about deed in lieu of foreclosure, you will definitely see and understand that both sides will reap several advantages. In my estimation, the borrower stands to gain more than the lender. The borrower is basically nothing to lose going into the negotiations, since he or she is already almost in a foreclosure procedure. Thus having a deed in lieu of foreclosure is indeed a win-win for all parties involved

Ling Wellness » Deed In Lieu Of Foreclosure

Deed In Lieu Of Foreclosure

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