Deed in
Lieu
Deed in lieu is basically tranferring title to your house
to the bank by signing the deed to the bank, and in
exchange, the bank will not proceed with foreclosure. This
is also not an easy option if there are other lien holders
involved, like a second mortgage. Remember when the senior
lien holder goes to foreclose, the junior lien holders
probably will end up with nothing. So sometimes the junior
lien holder can be convinced to buy out the senior mortgage
and the negotiate the deed in lieu with the homeowner. You
are still going to have to look to see if your bank will
not come after you for a deficiency judgment. I recently at
the time of this writing had one client who walked away
from his house with a deed in lieu foreclosure a few years
ago and had a deficiency judgment show up on his credit
report. Needless to say the client filed for bankruptcy as
the judgment was for over $65,000. So sometimes it’s just
not worth the time in bothering with these methods as your
credit is already damaged from missing your mortgage
payments anyway and filing for bankruptcy would be your
best alternative in getting a fresh start.