How to Stop a Home Foreclosure With a Deed
Having your home foreclosed upon can be a devastating event. You save for the down payment, work hard to keep up with the monthly note, but the ramifications of a job loss, divorce or other catastrophic event can end in your home getting sold out from under you. However, it need not come to this. If you fail to pay your mortgage for 31 days, you may be eligible to offer your bank what is called a deed in lieu of foreclosure (DIL). The DIL is only possible for a primary residence in which you currently reside.
Other People Are Reading
Instructions
-
-
1
Gather documentation proving you cannot make your payments and talk to a real estate attorney. Laws relative to the DIL process differ by state. An attorney can give you the current information on the process and how it may affect your tax liability, for example.
-
2
Get the bank to agree in writing not to go after you for any deficiency. If you owe the bank more than your home is currently worth, make sure the bank will not sue you for its loss. Some states forbid mortgage lenders from taking any such legal action. Some banks will agree to a DIL even if a deficiency exists to spare themselves the cost and trouble of a foreclosure.
-
-
3
Write a letter that says explicitly that the deed in lieu is offered voluntarily. Your attorney can draft this correspondence. A DIL can be challenged after the fact if there is any evidence it was made under pressure from the lender. Your letter gives the bank legal assurance against any such challenge.
-
4
Look over the DIL agreement from the bank. Your attorney can negotiate the terms, if necessary.
-
5
Sign the Deed in Lieu of Foreclosure. The bank will see that the document is recorded.
-
1
