How to Know when it is Time to Consider a Deed in Lieu of Foreclosure
If you are in danger of losing your home, one option you may want to consider is a deed in lieu of foreclosure. This process, also known as a mortgage release, simply means that you return the rights to your property to the bank in exchange for a release from mortgage debt obligation. The terms of the deed in lieu are arranged in negotiation with your mortgage lender.
You may be a candidate for a deed in lieu if you are facing a long term hardship, ineligible to refinance or modify your mortgage, are behind on your payments or in danger of falling behind, owe more on your home than it is worth, have been unable to sell your home, or some combination of these circumstances.
The benefits of a deed in lieu of foreclosure are that it allows you to begin rebuilding your credit sooner than if you went through the foreclosure process, releases you from the mortgage debt, and may allow you to purchase a home again sooner than you would be able to with a foreclosure. In addition, many lenders will make arrangements to help you transition out of your home.
If you are interested in pursuing a deed in lieu, your first step will be to contact Washington Short Sale Team about their eligibility requirements. Typically, you’ll be required to fill out an application detailing your financial situation and the circumstances that have caused you to be unable to afford the mortgage payments. You’ll need your mortgage statements, bank statements, tax paperwork, pay stubs, and other documentation that supports your application.
Typically, your lender will make a decision and present options to you within about 90 days. In some cases, depending on the agreement you make with the lender, you may be able to stay in your home for up to three months, or lease it back from the bank for up to one year. Some companies provide relocation assistance of up to $3,000 if you leave the home clean and in good repair.
In exchange, you will have to sign over the deed of the property to the lender and sign a contract called an estoppel affidavit, which outlines the terms of the deed in lieu of foreclosure and indicates that you are pursuing this option of your own free will, as well as whether the lender has the right to pursue a deficiency judgement against you for the difference between the debt owed and the fair market value of the property. For more information on a deed in lieu of foreclosure in Washington State, contact Washington Short Sale Team at (206) 852-7026 and speak with a specialist.