If you cannot afford your home and have tried all other possible options, then you have reached a point when the foreclosure is unavoidable. Such situations lead to a Deed-in-Lieu of Foreclosure (DIL), which is basically a situation when a homeowner voluntarily gives the property ownership to the mortgage company in order to be released from mortgage payments and loans.
Although the procedure varies from state to state, some specific guidelines are already in place which can ensure a smooth foreclosure. The vital part of the entire process is that both the lender as well as homeowner accepts that deed in lieu of foreclosure is indeed the only option and an agreement is worked out between the parties involved.
How can you benefit as a homeowner
A deed in lieu of foreclosure is far more advantageous as it ensures that the damage to the credit score of the homeowner is minimal. It also provides a chance to talk on the possible differences between the actual value of the home and the liabilities towards it.
If state permits the foreclosure, then a lender can even sue the owner for the deficit which is not recovered during foreclosure. In a deed in lieu foreclosure, it is also possible that the borrower may accept to pay the deficit over time.
In many cases, an additional benefit which a borrower gets is the money for relocating. This is a huge incentive for people.
Detailing the process
Normally, the homeowners fall behind 90 days on their obligation to mortgage payments. A negotiation takes place between the lender and the homeowner which leads to a deal where the homeowner is asked to vacate the home and leave it in a decent condition.
The borrower provides income proof as well as financial information for the whole process. He/ she needs to provide evidence which states that the home cannot be sold for an amount which is just owed by him, but rather should be done at the market value. On the closing, the homeowner signs the relevant papers to facilitate the process.
This procedure usually takes close to 90 days for completion. In certain cases, a homeowner may be permitted to live even after the transaction is foreclosed. It is best to take assistance from a lawyer for the whole process. There are numerous ways in which foreclosure can be avoided, and some might be slightly better than the rest.
What you must do during the foreclosure?
It is imperative that you collect the entire loan as well as financial information before calling a mortgage company. Get you documents in place. You should have access to your monthly mortgage statements, debt payments as well as your detailed income details. You should also be ready to explain the troubles of making mortgage payments, why it may be a problem over the long term and assure them that you will vacate the place to avoid foreclosure. In order to give you the sound solutions for your problems, a mortgage company will need to understand your issues.
The mere reference of insolvency or delinquency can be painful to people especially when it comes to having a roof over their head. But, if you delve deeper, the far reaching benefits of deed in lieu of foreclosure can help you salvage some grace as well as give you a chance to own a home in future.
This post is contributed by Adam Anderson. He works as a financial consultant in one of the topmost multinational company. He likes blogging in his spare time. He thinks taking payday loans to come out of financial mess is a good idea.