How to Get a Bank to Take a Deed in Lieu of a Debt
A deed in lieu refers to mortgage debt, and convincing your home loan lender to take a deed in lieu helps prevent a mortgage foreclosure. A deed in lieu involves your home loan lender agreeing to take back the deed to your house. You sign over the title and vacate the home, after which you are no longer responsible for the mortgage loan.
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Instructions
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Meet with your lenders to discuss your eligibility for a loan modification. Before considering a deed in lieu, some lenders will review a borrower's situation to see if he qualifies for mortgage modification. With modification, a lender reduces a borrower's home loan payment to increase affordability and keep him living in the house. Economic hardship is a criteria for modification.
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Find a buyer for your property. Borrowers who don't qualify for modification must attempt to sell their homes, either listing their homes with real estate agents or using the "for sale by owner" process.
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Submit your appeal for a deed in lieu after 90 days. If you were unsuccessful in your attempts to sell the house and your financial situation hasn't improved, you can request a deed in lieu of foreclosure after three months or 90 days.
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Discuss the need for a deed in lieu with your mortgage lender. Lenders agree to take back the deed to a house only after a borrower presents his reason for needing this type of mortgage help. Criteria for a deed in lieu include submitting information about present earnings, debts and other bills. Borrowers must also write a detailed hardship letter, which provides a thorough explanation of the situation. The letter should include the causes of the borrower's economic hardship and payment issues.
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Tips & Warnings
A borrowers has one month to vacate the property once a lender accepts the request.
Credit damage is typical with a deed in lieu, but not as much damage as with a mortgage foreclosure.
