{"id":1895,"date":"2010-01-12T16:15:12","date_gmt":"2010-01-12T21:15:12","guid":{"rendered":"http:\/\/www.DuncanWierman.com\/content\/?p=1895"},"modified":"2010-01-13T09:24:17","modified_gmt":"2010-01-13T14:24:17","slug":"what-is-a-deed-in-lieu-of-foreclosure","status":"publish","type":"post","link":"https:\/\/www.duncanwierman.com\/content\/what-is-a-deed-in-lieu-of-foreclosure\/","title":{"rendered":"What Is A Deed In Lieu Of Foreclosure?"},"content":{"rendered":"

A Deed in lieu of foreclosure<\/strong> is a deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.<\/p>\n

The deed in lieu of foreclosure offers several advantages to the lender but is a bad deal for the borrower. Advantages to a lender include a reduction in the time and cost of a repossession, and additional advantages if the borrower subsequently files for bankruptcy.<\/p>\n

<\/p>\n

The principal advantage to the borrower is that it immediately releases him\/her from most or all of the personal indebtedness associated with the defaulted loan. However, a deed in lieu of foreclosure is reported to the borrowers credit and has the same effect as a foreclosure. The simple translation is with a deed in lieu of foreclosure the lender gets the property back saving the time and expense of a foreclosure and the borrower’s credit is marked for 7 years with the equivalency of a foreclosure. <\/strong><\/p>\n

In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred. Both sides must enter into the transaction voluntarily<\/em> and in good faith<\/em>. The settlement agreement must have total consideration that is at least equal to the fair market value of the property being conveyed. Generally, the lender will not proceed with a deed in lieu of foreclosure if the current fair market value of the property exceeds the outstanding indebtedness of the borrower.<\/p>\n

Because of the requirement that the instrument be voluntary, lenders will often not act upon a deed in lieu of foreclosure unless they receive a written offer of such a conveyance from the borrower that specifically states that the offer to enter into negotiations is being made voluntarily. This will enact the parol evidence rule and protect the lender from a possible subsequent claim that the lender acted in bad faith or pressured the borrower into the settlement. Both sides may then proceed with settlement negotiations.<\/p>\n

Neither the borrower nor the lender is obliged to proceed with the deed in lieu of foreclosure until a final agreement is reached.<\/p>\n

<\/p>\n

Summary<\/strong>: A deed in lieu of foreclosure is a good deal for the lender but the borrower is left with a foreclosure\/foreclosure equivalent on their credit file. A deed in lieu of foreclosure offers no tangible benefit to the borrower<\/span>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

A Deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings. The deed in lieu of foreclosure offers several advantages to the lender but … Continue reading What Is A Deed In Lieu Of Foreclosure?<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":939,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[303],"tags":[],"_links":{"self":[{"href":"https:\/\/www.duncanwierman.com\/content\/wp-json\/wp\/v2\/posts\/1895"}],"collection":[{"href":"https:\/\/www.duncanwierman.com\/content\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.duncanwierman.com\/content\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.duncanwierman.com\/content\/wp-json\/wp\/v2\/users\/939"}],"replies":[{"embeddable":true,"href":"https:\/\/www.duncanwierman.com\/content\/wp-json\/wp\/v2\/comments?post=1895"}],"version-history":[{"count":4,"href":"https:\/\/www.duncanwierman.com\/content\/wp-json\/wp\/v2\/posts\/1895\/revisions"}],"predecessor-version":[{"id":2113,"href":"https:\/\/www.duncanwierman.com\/content\/wp-json\/wp\/v2\/posts\/1895\/revisions\/2113"}],"wp:attachment":[{"href":"https:\/\/www.duncanwierman.com\/content\/wp-json\/wp\/v2\/media?parent=1895"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.duncanwierman.com\/content\/wp-json\/wp\/v2\/categories?post=1895"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.duncanwierman.com\/content\/wp-json\/wp\/v2\/tags?post=1895"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}