- Image via Wikipedia
In has been the position of many lenders that they would like their borrowers to attempt to sell the property prior to applying for a deed-in-lieu of foreclosure. These days we find that there is not always one solution for homeowners that need to walk away from their properties or to attempt to liquidate them along with their assets. In this case out of the blocks comes Bank of America with doing away with the 90 day rule of having to list the property first prior to applying for a deed in lieu or DIL. This is one step that will hopefully help those homeowners looking to expeditiously get rid of their property to do so by handing the property back to their lender. This is one of those arenas that most people have little to no experience with these types of arrangements so we would like to provide our expertise.
Deed-in-lieu exists as many homeowners need to find a way to give their property back. The most important factors to take into consideration are:
Tax Implications – In the same manner as a short sale or as few know the same as post-foreclosure sale, Deed In Lieu of Foreclosure carries tax implications and liability. Usually, the lender will provide the debtor with a 1099C covering the difference between what the lender considers the property is valued at minus any additional contributions or promissory notes that the investor/mortgage insurance as the borrower to take.
Credit Impact – Credit for our clients is an important issue. Many though come to us distraught about the impacts that their credit has already taken but we advise our clients that it is important to not make a bad thing worse. It is important to remember that it is your credit that future lenders will base their risk assessment off of and if you gave the property back instead of having to have the bank go through the whole process of having to forcefully take it back it is likely that it will look better in the future.
NOTE: One last and important thing to note is that if you have multiple liens all subordinate liens must waive all rights to the property in order to allow for a deed-in-lieu to be completed. Please note that even if both of the mortgages are with the same lender they are still likely to be help by different investors and even if the investors are the same they are still different pools of loan so as long as there are any Jr. Liens it is likely that you will not be able to complete a DIL.
If you have any additional questions please feel free to post them up by signing and and posting your concerns. If you’d like immediate attention please feel free to also reach out to us by calling our Deed in Lieu experts at 888-934-3444 or reach out us at info@mlreport.com
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