How to qualify for deed in lieu of foreclosure

Hi Luis,

As your house is already listed in the market, the lender will not accept a deed in lieu. Moreover, considering your high salary, I feel it is quite impossible for you to go for a deed in lieu.

hi luis,

you may qualify for a deed in lieu of foreclosure only under certain conditions:

1) the property must be owner-occupied and it should not be any investment property.
2) you must be at default for 31 days or more at the time when the deed-in-lieu is executed.
3) the title to the property must be free and clear of any lien.
4) you must provide documentation of a reduction in your income or increase in living expense for which you've failed to make the payments.
5) you should not own any fha insured loan or any other loan held by hud.

btw, you have mentioned that you have a high salary. in that case, the bank most likely will not accept the deed in lieu. you need to think of any other alternative repayment plan.

Larry, Mary. Thanks for your help, some addtional qs.
Are the rules that you mention flexible? I'm trying to find a solution before foreclosure. I was living in the property until I moved for my job. If there is no option for deed in lieu and I do a foreclosure, I undertsand that lender can try to get my assets but can the lender go after my salary too?

Thanks for your help,

LC

Luis,

After the loan is in default, lender can be contacted to know whether he will accept a deed in lieu of foreclosure. If the loan is still current he won't consider any such request.

The lender will ask you to submit a hardship letter detailing the financial condition because of which you are not able to continue the payments and would like to give the property back through a deed in lieu of foreclosure. Along with the letter you will have to submit documents detailing your monthly expenses and earnings. Lender would then check details and if a real financial hardship exists, would consider the dil option to help out the borrower.

But from what you have mentioned, you want to give the house back through a dil as you had to move because of change in job. I doubt whether lender would agree to accept a deed in lieu in your situation.

You should not look at foreclosure or dil as a way out. Both will damage your credit. Did you try renting it out?

What shoild I do .. Please help me in some info....

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Hey lean, if you are facing a pre-foreclosure situation, you should speak to your lender about the options that you can avail. If you want to save your property, then you can apply for a loan modification. Under this program, you would get a repayment plan for paying off your dues depending upon your financial situation.

In case, you are not interested in saving the property, deed in lieu of foreclosure can be a good option for you. You will have to surrender the property to your lender. The lender, on the other hand, will sell off the property and try to recover the dues. If there's any deficient amount, he would forgive it.

We have had our home on the market for almost a year. We have already reduced it $150,000 (to $50,000 below loan balance), hoping to do a short sale - no offers yet! We are 1 payment behind but were going to try and make a payment this month? Will 2 months behind "help" our chance for a deed in lieu?

Your lender will consider your assets, your income and personal situation before taking back the property. They will review it, but let me tell you this; it is important for you to request for the deed in lieu of foreclosure now because it is more likely to get it approved by your lender now rather than later if your home price continues to dip. They will auction the property off, and they are a business and want to make the most money from the deal. If you have had it for sale for 6 months with no luck selling it, you stand a chance of getting a deed in lieu of foreclosure. Lender want to see the property listed for 60 days 1st with no luck selling it before they decide to give you a deed in lieu option. So act fast before your chances of getting rid of the property gets lower.

I am trying to do a deed-in-lieu of my home. I tried to do a short sale, but the request was denied because of income. I have had to leave my home because of 7 burglaries in 1 1/2 years, 1 home invasion attempt, and several vandalisms of my property by a group of neighborhood thugs. I am now renting and not able to pay the mortgage even if I wanted to stay there. Will my income be an issue with the deed-in-lieu? I plan to send the bank an updated financial worksheet, but will that be enough? I am desperate at this point because I just can't live there anymore being the target of so much crime.

Welcome Clark,

The lender will check your financial situation before approving a deed in lieu of foreclosure. If the lender finds that you would be able to pay off your loan payments with your current income, he won't be ready to approve a deed in lieu of foreclosure.

we have two lots that we have been paying interest only for 5 years the developer took off with the money never finishing th subdivision we wil not qualify for a deed in lieu because of income to high if we do a short sell will we get a 1099 on what is owed or ifwe go into forecloser can they come after our house and 401k. we have had them on the market for over a year

Hi Guest,

Your query has been replied to in the given page:
http://www.mortgagefit.com/foreclosure/deedinlieu-highincome.html

Take a look at it. Hope it helps you.

Thanks