Deed in Lieu
This is when an agreement is reached between the lender and the homeowner to sign the property back to the bank, thereby ending the need for the bank to complete the foreclosure. Banks tend to prefer short sales because the condition of the property is usually better with the homeowner providing maintenance throughout the marketing process. The deed in lieu also does nothing to grant clear title to the bank so in many cases they are better off spending the additional money to foreclose rather than try to settle with secondary liens. With DIL:
-The homeowner generally ends up with much less time in the home than is the case with a typical short sale.
-Typically, with a deed in lieu, the homeowner is left responsible for the lender’s loss on the loan, making them susceptible to collection efforts and deficiency judgments.
-Once completed, the homeowner no longer has any say as to what the home eventually sells for or what deficiency they will be expected to pay will turn out to be.
-With a deed in lieu, the homeowner is often on their own, without the professional representation of a licensed real estate agent watching over their interests in the transaction.
-Recovery as it pertains to consumer credit is usually easier with a short sale than with a deed in lieu, which is seen by most lenders as a quicker form of foreclosure.
Forensic Loan Audit
This is not an option to consider. It is listed here because the general public at this time perceives it to be one. According to the FTC there is NO evidence that forensic loan audits will help you get any foreclosure relief, even if they’re conducted by a licensed, legitimate and trained auditor, mortgage professional or lawyer. They noted:
-Even if you file suit against your lender and win, they are not required to make your payments more affordable.
-If you sue to cancel your loan, you will then have to return the borrowed money.
- With substantial fees, any delay in the foreclosure process is dearly paid for, likely costing as much or more than making house payments.
Bankruptcy
While it is true that a properly prepared bankruptcy filing can delay foreclosure, it is by no means a cure. After the initial delay, the lender can still foreclose on the property, leaving you with both a bankruptcy AND a foreclosure on your credit.
-If it is your intent to keep the home you will still have to make the payments. Bankruptcy does nothing to reduce your payments.
-If your intention is to delay foreclosure only, the cost is very high, both in dollars and the impact on credit. A short sale can be done for free, it’s better for your credit, often allows more time in the home and has a possibility of funds for transition.
