How Does The Process Of A Deed In Lieu Of Foreclosure Work?

Something has happened to you and your spouse and family that you have no control over. You or your spouse lost your job or both of you lost your jobs, someone in your family got so sick that you had to take time off work to take care of them, or one of the breadwinners dies.

Clearly you have a hardship that is going to take priority in your lives. You are going to have to deal with life on life's terms and you may get behind on your mortgage.

If you decide that you want to keep your home there are so many options available right now in our society. The Congress and President have the loss of homes for people uppermost in their minds at present and there is a lot of help out there.

You could go to your lender and request a loan modification in order to lower your payments. You can request that they add your missed payments onto the end of your loan. You may have a "Right of Redemption" for up to a year to straighten out your situation with your lender.

But considering your situation you decide that you want to give the property back to the lender because you cannot handle what is going on. Grief at the loss of a long time job, or a family death can make things appear really hopeless and keeping the house becomes low on your list of priorities.

Because you have had a life altering hardship you can request that your lender take your house back. You would give your lender a "Deed in Lieu of Foreclosure", where you give it back to the lender and let them deal with getting it sold again.

Clearly lenders do not want to take houses back so they will want you to try to sell the house for at least 90 days. They will want to know that the property is on the market at least 90 days or whatever their requirement is. If you get a buyer for the property your Realtor can then negotiate a "short sale" with your lender so your lender accepts less than you owe. This is not an easy thing to do and you should get a Realtor who has experience in doing short sales. Your Realtor will keep all the necessary records for you so that you are in compliance with the lender.

Once the 90 days has passed and the house is not sold, then the lender will decide whether they will allow you to give it back to them. At that time you would give them a "Deed in Lieu of Foreclosure" so that you can be out from under the mortgage and get your life on the road to where you need to be.

The lender will require a truckload of documentation on your situation so they can make their decision. You will be required to provide information about every aspect of your financial lives. This is all part of the process so be prepared. It is always preferable for you to do everything you can to avoid or stop foreclosure. Dealing with your situation in this way may pave the way for your future home financing: this will not affect your credit as negatively as a foreclosure.