Deed in Lieu of Foreclosure

We attempted to do a deed in lieu of foreclosure. Similar to you, we attempted a mortgage modification with no luck. The problem we ran into was that the bank wanted me to cash in my 401k, turn over all that money to them, and then they would take the deed in lieu of a foreclosure, HOWEVER they would still report the difference in between our mortgage and the value of the home, as a write-off. In other words, not only would we have lost our home AND my 401k, our credit would still be ruined due to the bank writing off nearly $200K against our loan. AND they could have come back after us for that money later in court. So we said, screw it, we're staying in the house until they foreclose. We saved the money we would have paid on the mortgage and were able to pay down some bills that we had incurred while trying to stay on top of our mortgage (we had fallen behind because my husband lost his job, and was only able to find a job where he made about 25% of what he had before).

So... just be prepared for the bank to balk at your offer of a deed in lieu of foreclosure. (Also, realize that the way the current laws are written they really have no incentive not to foreclose. They benefit financially from foreclosing on you, as they are then able to write it off as "bad debt." That's why banks are still making record profits despite all the foreclosures.)

Bottom line though, it has been 3 years since our home was foreclosed upon. We rented from a friend for 2 years, and now rent from a property management company. In a few months we will be eligible to buy again. During this time we have paid off all the debt we incurred since my husband lost his job, so we are back to being debt-free. It has actually not been as terrible as we thought it would be. It was definitely emotionally wrenching to lose our dream home, but at the end of the day... it was a business transaction, not some moral failure on our part. Life moves on.

I'm so sorry you are going through this. Rest assured, you will make it through this, as thousands of us have. It will be hard, but one day you will look back at this as an unpleasant memory, and it will not define you or your lives. You still have your family, and that is the important thing to hold onto. Hang in there!

Hi Gerri,

My husband and I do foreclosure mitigation inspections so we run into this everyday. The mitigation process is a joke. Banks do not work with you, they simply make you jump through hoops to eventually tell you that you don't qualify or that payments will not change. I'm tickled you want to get on with your life and have been looking for solutions.I understand you want to put this behind you. I do caution you that if you leave your property that ANYTHING that happens to your home prior to foreclosure you are financially responsible for it. Banks do not negotiate these costs. They are simply tacked on. I happen to agree with your realtor. There is such a glut of foreclosures on the market that the banks are not doing quick evictions. Some are taking over a year.

The biggest problem we are seeing with homes is not vandalism but theft of the heating and air system and all the copper wiring and pipes in the house. When these are stolen the walls are usually smashed in or the floor is caved in to get to the wiring or the pipes. These costs are usually between 10,000 and 20,000. I would consult an attorney before you make a move or commit to a friend.

God bless,

M.

stay in your house as long as you can. the foreclosure process takes anywhere from 12 to 18 months. They can not evict you until the process is done. it is not smart to move and pay rent elsewhere we did that. and could have stayed in our own home for a much longer time. we faced exactly what you did. I was diagnosed with breast cancer and my husband got hurt at work. we managed to keep things together for a few months. in April of 08 we finally gave up. we stopped paying rent and moved out in august of 08. our home was not foreclosed on until august of 09 and was not sold to anyone else until November of 10 we could have had almost 2 years of not paying mortgage but saving to get ourselves back on track. instead we paid an exorbitant amount of rent and had a hard time getting back on track. stay as long as you can.

Gerri,
I just took some information from my church yesterday where they have a program to help you out with this. When I get home today I will get you the name of the person you need to contact. Our church is in Sayreville but I believe it's worth the call. The head of the department was telling the congregation of a new program where you can get a loan of $48k a year to pay for your mortage, and if you stay in the house for 10 years you wont have to pay it back! I'll get back to you as soon as I get home from work.

.

check my personal message to you and also call me I can give you a lot of information to you before you do this. CALL ME or EMAIL ME.

Also consider that you will still have to insure the home to cover yourselves, and insuring an unoccupied home is VERY expensive.

Stay in your house. Why in the world pay rent when you can stay in your house and put money away. My friend did this becuase she wanted to move on, but now regrets it, 8 mo. later they have not forclosed and she could have saved about $9000.