When you face foreclosure, you may feel like the walls are closing in on you and that you have no choice but to give into the process. However, there are a couple of foreclosure defense options available to you that can release you from your liability of repaying the loan. One is a short sale, which allows you to sell your home back to the bank and use the proceeds to pay off some or all of the balance on your mortgage. Another option is a deed in lieu of foreclosure, which transfers the title back to the bank.
While a deed in lieu of foreclosure is a way to stop the foreclosure process, it could create a potential liability for repayment of your loan. This process could also have a negative effect on your credit, meaning you may have difficulty purchasing another home in the future. It’s possible you’ll have to wait four years without any extenuating circumstances, and two years with, in order to obtain a mortgage on the secondary market by Freddie Mac or Fannie May. However, the wait for obtaining a mortgage when going through the foreclosure process is up to seven years without extenuating circumstances, five years with. If you opt for a short sale, it could be as little as a two-year wait.
When you pursue a deed in lieu of foreclosure, make certain you are specifically released from the liability of repaying the loan. It’s possible the bank may reject your offer for a deed in lieu of foreclosure if it means the bank won’t profit from the offer, or if the servicing guidelines prohibit the transaction.
For more information on the foreclosure process, a deed in lieu of foreclosure or a short sale, contact us. We’ll sit down with you to discuss your circumstances to determine the best option for you.
