Loss Mitigation Blog

If you are facing foreclosure you might want to consider offering your deed in lieu of having your property taken from you. Returning the deed sometimes has different advantages opposed to a foreclosure. It can sometimes be beneficial to both the lender and the borrower.

If the deed is given back to the lender it usually releases the borrower from all or most of the money still owed. Another advantage is the fact that it often is not usually made public opposed to a foreclosure. Also the lender may offer the borrower some generous terms that would not otherwise be given. Borrowers also discover that a deed in lieu of having the lender take over the property is the fact it does less damage to a persons' credit.

Returning the deed can also help the lender. One of the advantages is the fact that it takes much less time than it takes to go through taking over your property. It also means the borrower will cooperate and return the home in good condition (opposed to the borrower causing damage to the home as an act of revenge). It is less costly for the lender to take back the deed as the property can be processed to sale more quickly.

There are some requirements for the deed in lieu of having the property taken over by the lender. The indebtedness needs to be satisfied by the property being transferred. Also, both the lender and the borrower must jointly agree to the transfer and it must be done so in good faith. Sometimes the borrower will not agree to accepting the deed if the indebtedness is larger than the value of the property. However, borrowers are more readily to accept the deed, in our present economy, realizing that they will most likely be forced to take the property in the future anyway. It is important to understand that the procedure will not and cannot continue until both parties agree to the final agreement.

If the deed is going to be returned it must be done so within 90 days of the initiation of the process to take over the property. Also, if the borrower has a second loan on the property to be returned, this can create additional problems since each of the parties need to agree to whatever arrangements are being made. In our present economy a second loan can often cause major issues because this loan may prevent the property from having enough value in order to cover both the first and second loan.