Posted on: 18th Jan, 2008 06:00 pm
I should first preface my question by stating that I am not concerned with my credit score, my ability to own a home in the future or the possibility of becoming homeless. I haven't made any mortgage payments for about 10 months now. I was hoping I would be foreclosed upon by now but the loan servicer is dragging their feet. I refused to make any effort attempting to sell my house because I have better things to do with my time. I have kept in contact with my loan servicer and have good communication with them. This has had the effect of taking lawyers out of the loop. It seems like they will accept a deed in lieu. The date of the foreclosure is February 14. I have two questions before proceeding with negotiations.
1. I have read in many forums that banks would rather not foreclose on properties due to the costs involved. What exactly are these costs?
2. I have also read that often the loan servicer will provide moving expenses for the owner as part of the deed in lieu agreement. Is this true?
1. I have read in many forums that banks would rather not foreclose on properties due to the costs involved. What exactly are these costs?
2. I have also read that often the loan servicer will provide moving expenses for the owner as part of the deed in lieu agreement. Is this true?
Hello Smoky,
If your lender is willing to accept a deed-in-lieu of foreclosure then there is nothing to worry. Usually they don't agree to accept a deed-in-lieu if you have not tried to do a short sale and after this they cannot file a deficiency judgment to recover the unpaid mortgage balance.
1. Regarding the foreclosure costs, it is usually something around $ 60,000 on an average. This includes clean-up costs, repairing and painting costs, cost to cover the unpaid mortgage, insurance cost, appraisal fees, processing fees, legal costs and they even have to pay a gardener and the service people to maintain the property before it is sold to a new buyer. Apart from this, the lender has to pay a commission of not less than 4% to the foreclosure commissioner along with other costs like advertisement, title search and recording fees.
2. Lenders may provide the moving expenses to you but I'm not sure if that's always a part of the agreement. I think it depends on the lender and you have to talk to your lender to know about this.
If your lender is willing to accept a deed-in-lieu of foreclosure then there is nothing to worry. Usually they don't agree to accept a deed-in-lieu if you have not tried to do a short sale and after this they cannot file a deficiency judgment to recover the unpaid mortgage balance.
1. Regarding the foreclosure costs, it is usually something around $ 60,000 on an average. This includes clean-up costs, repairing and painting costs, cost to cover the unpaid mortgage, insurance cost, appraisal fees, processing fees, legal costs and they even have to pay a gardener and the service people to maintain the property before it is sold to a new buyer. Apart from this, the lender has to pay a commission of not less than 4% to the foreclosure commissioner along with other costs like advertisement, title search and recording fees.
2. Lenders may provide the moving expenses to you but I'm not sure if that's always a part of the agreement. I think it depends on the lender and you have to talk to your lender to know about this.
well i told thier loss mitigation department i didn't have time to attempt the short sale and they told me to just fax them a signed letter stating that i tried to sell without going through a realtor and that would be good enough. i owe 50k and my house is worth about the same amount. is the fact my house is small the reason they don't want to forclose? i'm just wondering how much leverage i might have before i negotiate any further.
Hello Smoky,
Welcome back.
If you have already spoken to the loss mitigation department and they have instructed you on how to progress, then I think they will accept a deed-in-lieu.
If your house is worth $ 50K or something around that then the lender will not take the burden of foreclosing it because, as I have already explained, the foreclosure process itself will cost something around $ 55 - 60k.
If your lender is willing to accept a deed-in-lieu, that will save your credit report from the damaging effects of foreclosure and I think you should go for that.
What negotiation are you talking about?
Welcome back.
If you have already spoken to the loss mitigation department and they have instructed you on how to progress, then I think they will accept a deed-in-lieu.
If your house is worth $ 50K or something around that then the lender will not take the burden of foreclosing it because, as I have already explained, the foreclosure process itself will cost something around $ 55 - 60k.
If your lender is willing to accept a deed-in-lieu, that will save your credit report from the damaging effects of foreclosure and I think you should go for that.
What negotiation are you talking about?
I guess I was thinking that if they do not provide me with any funds that would cover moving expenses that I would just stay in my house and let the forclosure proceed. I don't care about credit scores and have no assets.
Hello Smoky,
I think it will be better if you talk to your lender directly and ask if they are going to provide you with the moving expenses.
In any case, even if you stay back in your property and let it go for a foreclosure, it will not only ruin your credit but at one point of time you'll have to move out of your property after the foreclosure sale is over.
I think it will be better if you talk to your lender directly and ask if they are going to provide you with the moving expenses.
In any case, even if you stay back in your property and let it go for a foreclosure, it will not only ruin your credit but at one point of time you'll have to move out of your property after the foreclosure sale is over.
The largest expense for the lender when forclosing are the attorney fees. I have never heard of a lender paying for moving expenses so I wouldn't bank on that.
Cash for keys happens all the time. It's in the banks best interest to get the home turned over to stop the bleeding.
Yeah Smoky, it does happen but not with all lenders. There are exceptions always and your lender might be one of them. For you, the best thing would be to sell off the property and pay off the proceeds if you are not that keen on keeping the house.
Maybe you can get them to throw in a new car too, lol.
I was told by a mortgage broker that if I did a deed in Leui I will still be responsible for my mortgage, that all I was doing was giving the lender the house but not the mortgage. She said what they would do is sell the house then make me pay the difference. This was an option our lender gave us. However, my husband was able to negotiate with our lender to keep us from having to do that. We had to pay 2,000 for atty fees (they were inthe 1st stages of foreclosure), then they are putting the past due payments on the end of the note and part of our monthly payment will go to that.
Hi Tawana,
Usually when a lender accepts a deed-in-lieu, he doesn't ask for the deficiency. But it's good that your husband could negotiate with your lender. So, are you into an alternative repayment plan? I'm saying so because you said the past due payments are being added to the end of the note and your monthly payment will be based on the total of the dues and the usual payments.
Regards,
Jessica
Usually when a lender accepts a deed-in-lieu, he doesn't ask for the deficiency. But it's good that your husband could negotiate with your lender. So, are you into an alternative repayment plan? I'm saying so because you said the past due payments are being added to the end of the note and your monthly payment will be based on the total of the dues and the usual payments.
Regards,
Jessica
