Posted on: 12th Feb, 2009 10:13 pm
Would banks rather do deeds in lieu instead of short sales? If so, why aren't they trying to do that instead of sitting on these upside down properties for months and months?
Hi mcj,
A short sale and a deed-in-lieu are pretty much similar. In both cases, the creditor takes over the property and sells it in order to recover the amount the debtor owes them. However, there's a small difference between them. In a short sale, the debtor may have to pay the deficiency amount whereas in a deed-in-lieu the deficiency amount is forgiven by the creditor. Thus, I reckon, banks prefer a short sale to a deed-in-lieu. However, the banks try and avoid such measures, be it short sale or deed-in-lieu, as none of them helps the bank recover the full amount of the loan. for more details you can visit the following page:
http://www.mortgagefit.com/florida/shortsale.html
A short sale and a deed-in-lieu are pretty much similar. In both cases, the creditor takes over the property and sells it in order to recover the amount the debtor owes them. However, there's a small difference between them. In a short sale, the debtor may have to pay the deficiency amount whereas in a deed-in-lieu the deficiency amount is forgiven by the creditor. Thus, I reckon, banks prefer a short sale to a deed-in-lieu. However, the banks try and avoid such measures, be it short sale or deed-in-lieu, as none of them helps the bank recover the full amount of the loan. for more details you can visit the following page:
http://www.mortgagefit.com/florida/shortsale.html
Well, in short sale, it is the responsibility of the owner to find a buyer, and bank has to agree for it where as in DIL, you just deed the house to bank and it is their responsibility. Most of the cases if you have 1 loan, the change that bank forgives the difference is high, unless there is a second loan and complicates things.