Deed In Lieu of Foreclosure in Washington State
Short sale and deed instead of foreclosure are often very similar but with some differences and this depends on the situation. Deed in Lieu of Foreclosure is an alternative to the foreclosure. In a deed instead of foreclosure, the owner of the property gives it to the lender willingly in a swap for the lender canceling the mortgage. The deed of the property is the item transferred. The lender will promise to terminate any foreclosure proceedings that may be already underway and also not to initiate any foreclosure proceedings. The lender in this situation may agree or not to forgive any shortage balance that may result in the property sale. Contact Washington Short Sale Team for more information on the deed in lieu of foreclosure process.
Is Short Sale a Better Option
The lender and property owner of the home may opt for a short sale on a home. The lender will agree to take less than the owed balance on the mortgage through a short sale. The deficit balance can be forgiven. Most often, mortgage companies ask their borrowers to accept the liability for any deficit balance. If you are considering a deed instead of or a short sale, you must go through their conditions and terms carefully and understand if the deficit balance is forgiven. Unlike in the deed instead of foreclosure, property ownership will remain with the owner and will not be transferred to the loan holder.
Most lenders will choose short sales just because they don’t like owning bothered properties. They will opt not to take the property due to foreclosure but rather see the property owner sell and will lose the deficit balance because foreclosure consumes a lot of time and money. Whether the lender picks a short sale or deed instead, it entirely depends on how they balance their risk and how their books will appear concerning the bothered property. The decision can also be impacted by local laws. A lender is also required to issue a file 1099C if he forgives a debt that exceeds $600 like in the deed. The mortgage debt relief act offers relief to the former owner for a forgiven debt.
If The lender Rejects Deed in lieu of Foreclosure or Short Sale
If the lender does not allow foreclosure deed instead or short sale, the last option is foreclosure even though it will present major problems. These actions yield less money that even a normal sale. If the sale happens to bring less of the owed amount, then the deficit amount will be forgiven. It is possible to mitigate the impact of filing bankruptcy because of the deficit balance if the home falls into foreclosure. The deficit balances are treated as bankruptcy. If the mortgage lender does not allow for reselling of the home, then bankruptcy will be the best option. Contact Washington Short Sale Team for more information on the short sale process and a deed in lieu of foreclosure (206) 852-7026.