What Exactly Is A Deed In Lieu Of Foreclosure & How Does It Work | Syracuse NY
Are you in a position where you are exploring all of your options in order to avoid foreclosure? Are you wondering about the loss mitigation option call deed in lieu of foreclosure?
A deed in lieu of foreclosure is a loss mitigation option (along with a short sale, loan modification etc.) that is available to borrowers who found themselves in financial distress and are facing foreclosure.
The process of completing a deed in lieu is not an exact process. The steps to complete a deed in lieu of foreclosure will very from lender to lender (who currently owns your loan). These specific lenders will have guidelines and requirements to complete this process with them, so be sure to inquire about their specific options. We want to discuss the general guidelines around a deed in lieu and give you a look into exactly who they work.
So what exactly is a deed in lieu of foreclosure?
A deed in lieu transaction is where the homeowner volunteers to transfer title of the property to the lender (bank) in exchange for a release of their mortgage obligation.
By doing this, you are essentially handing over total control to the bank. This will essentially save the bank money due to the fact that they will not have to pay attorneys, make repairs or pay for maintenance on the property. The foreclosure process can be costly for both parties involved.
How Does The Deed In Lieu Process Work in Syracuse NY
The first step in any loss mitigation attempt will be for the homeowner to reach out and make contact with the lender. The homeowner needs to make the lender aware of their specific situation and be upfront and honest with the lender. At this point you will request a loss mitigation package from the lender who holds the mortgage on your property. To begin the process, you will need to fill out and submit this package back to the lender along with other documentation pertaining to your finances and expenses. This extra documentation in question asked for but not limited to will be:
Bank statements (for all open accounts) over the past couple months
Recent W-2 Tax Returns (2 years)
A personal financial statement highlighting your income and expenses
Proof of income (recent pay stubs or profit and loss statement if self employed)
Hardship letter (explaining your current financial situation or cause of lack of payment)
Your Hardship letter will be an explanation to the lender in regards to a circumstance that is beyond the borrowers control as to why you are no longer capable of making your mortgage payment. Some examples that banks will consider to proceed with a loss mitigation option are:
The next step in the process will require the lender to do a title search. Typically lenders will only consider the deed in lieu option in Syracuse NY on a first mortgage. This means that their cannot be any other liens on the property when the title search is finalized (2nd mortgage, judgments, liens, etc.) If you do have judgments or other liens on the property (such as medical expenses) the homeowner (borrower) will have the option to repay these judgments to proceed with the deed in lieu process. Once the title search is completed and the lender agrees that there are no liens or judgments on the property, the lender will then get the property appraised to determine the full market value of the property.
If the bank determines that the deed in lieu will be beneficial for both parties involved, the borrower will be required to sign a grant deed in lieu of foreclosure, which is the document that will transfer ownership of the property over to the bank. Another document that is needed to complete the deed in lieu process is the estoppel affidavit. An estoppel affidavit will set out the terms of the agreement between the lender and the borrower (homeowner) while relaying the message that the homeowner acted voluntarily, permitting the lender to take control over the property.
In some cases, the lender will allow the homeowner to live in the property for a time period even though the property was turned over to the bank. This is something that needs to be agreed upon between the bank and the homeowner. This process is something called a "deed of lease". So if this is something that you are considering be sure to address this with your specific mortgage holder and see what their guidelines and requirements are for this process.
Wrapping Up| The Deed in Lieu of Foreclosure in Syracuse NY
With any attempt to avoid foreclosure in Syracuse NY, no matter the loss mitigation option you choose, it is vital that you act as soon as you are aware you will no longer be able to make your mortgage payment. The sooner that you are in contact with your lender and the faster you explain your specific situation, the better odds you will have of avoiding the foreclosure process. Foreclosure is something that none of us want to go through because it can cause a lingering effect on our financials and our family for years to come. With the devastating credit hit along with the lack of ability to get a loan in the future, this can have a tremendous effect on how you live your life for the next 5-7 years. We want you to know that there are several options to help avoid foreclosure but your odds of avoiding foreclosure become less and less the longer you wait to approach your lender.
If you are in a situation, where you have been behind on your mortgage payments for several months and the bank is threatening foreclosure and you have already been issued the foreclosure paperwork, your chances of settling with the bank are slim to none. Lucky for you we have an alternative option and an option that will benefit all parties involved. This option is the sale of your property. However this is not just a typical sale, this will be a cash sale, that will eliminate your debt with the bank, get the bank back their money and allow you to avoid a credit hit. We offer a service where we purchase properties in cash, offer no obligation cash offers with the ability to close in 7-14 days, while allowing the homeowner to make no repairs, requiring no inspections, no open houses, no commissions, no payment of closing costs and without having to hire a real estate agent.
To learn more about the process, please click the link below. We would love to help you through this difficult time in your life.
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