Foreclosure can be a pretty nerve-wracking experience for even those wholly familiar with real estate transactions and laws. The stress and complications of the situation as a whole can make it seem as if you have been painted into a corner with no choice but to lose your home, especially if short sales are not being accepted. Take heart in knowing that avoiding foreclosure might be possible with a deed in lieu of foreclosure.
To find a complete release from a mortgage obligation that is running your finances into the ground, you can pursue a deed in lieu of foreclosure, which is a transaction that surrenders the property’s title to the lender. If accepted, your mortgage and repayment requirements of the affiliated loan are discharged but, of course, you will no longer own the title to your home. For people who knew they could not afford their real estate, this is not as bad as it sounds and can even be seen as beneficial.
In order to use a deed in lieu of foreclosure, you must first provide certain relevant information to your lender in the form of a loss mitigation packet, including:
- Necessary monthly income and expense report
- Proof of listed income
- Record of most recent tax return
- Two recent bank statements for each account
- Evidence that your home has been on the market for 120+ days and has not been sold
Lastly, you will need to provide a “hardship letter,” or a detailed explanation as to why you can no longer afford to pay your mortgage and why the deed in lieu of foreclosure should be allowed. In most situations, your hardship must originate from an unpredictable and costly major life event, such as sustaining a debilitating injury that piled up medical bills or going through a divorce that ended with you paying substantial spousal maintenance each month.
Once a deed in lieu of foreclosure has been approved by your lender, you will need to transfer the title and make an estoppel affidavit, or the documentation that explains the many details of the deed. Be sure to agree to a deed in lieu of foreclosure that causes the full satisfaction of the debt you owed to the lender. If you do not, they may sue you for deficiency, or the amount of money you owed after accounting for the real market value of the property.
If all of this sounds complicated, that would be because it is. Short sales are known to be quite complex, and using a deed in lieu of foreclosure is often even more intricate and requires careful negotiation. If you think this might be the solution for you, contact our Atlanta foreclosure defense attorney at Schuyler Elliot & Associates, Inc today.