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Deed in Lieu of Foreclosure

by Doug & Gwen Campbell at Sun Bay Associates

Basically, a deed in lieu of foreclosure is the action a homeowner takes to give his/her house back to the lender in exchange for being forgiven the debt of the mortgage.  When considering a deed in lieu, be sure that the lender will accept it, and get the acceptance in writing.  As part of the written agreement, have the lender agree to forgive any amount that is not covered when the house is later sold by the lender.  Some experts believe that a deed in lieu looks better on a credit report than a foreclosure. 

 

From a lenders perspective, this is an act of last resort because banks really do not want property that needs to be maintained and hopefully resold.  The banks really want cash so they can continue to issue loans. Some lenders require that the house be placed on the market for at least three months in a good faith effort to sell it.  Many lenders will not consider a deed in lieu if there are other liens on the property. 

 

Another issue to cover in detail with the lender is to see how the lender will deal with the outstanding balance due.  Will the debt be forgiven or will the lender provide, in writing, assurance that it will not sue the homeowner for the balance at a later date.  Some lenders will keep the mortgage and not cancel the debt until the property is resold.  Be sure you know all the details of any agreement concerning the mortgage, your debt and what the lender is, in fact, agreeing to.

 

A short sale is preferable to a deed in lieu because in a short sale, the bank has agreed to forgive the difference between the sales price of the home and the amount owed to the bank, and the property is sold outright, freeing the homeowner from further obligation to the bank.  A short sale also frees up funds for the bank to lend instead of having to manage a piece of real estate.

 

As with short sales, it is wise to determine the impact a deed in lieu may have on your tax obligations before entering into any agreement.

 

For legal advice, consult a real estate attorney in your area. 

 

To learn more about short sales or other solutions to your real estate issues, visit www.EquityOptionsGroup.com or visit www.YourHouseOptions.com.

 

Remember, you have options.

 

Call Gwen at 727-939-1515 or Doug at 727-741-4189.

Or email [email protected] or [email protected]

Short Sales Explanation

by Doug & Gwen Campbell at Sun Bay Associates

Last time we talked about the merits of a short sale vs. a forebearance of mortgage.  Today we will go into the short sale process a bit.

 

The short sale option is something that most borrowers do not know about and many realtors do not want to deal with because of the length of time to complete such a transaction.  Under the best of situations, a short sale can take three months to complete and it is not unusual for a short sale to drag on for five or six months before closing. 

 

In the past, a bank would require that the borrower/homeowner, be behind by several months before even considering a short sale.  However, due to the changing market and the simply overwhelming number of houses in pre-foreclosure or outright foreclosure, some banks are accepting a short sale transaction before the homeowner is actually in arrears.  There are several items that must be provided to the bank to get a short sale approved.  Among these items are the previous two years tax returns, pay stubs for the past 2-3 months, bank statements for the past 2-3 months, a financial worksheet showing all assets and liabilities, including monthly payments, all sources of income and more.

 

A key advantage to a short sale, especially when considering foreclosure, is that a short sale might not tarnish your credit rating, where a foreclosure can affect your credit rating for seven years or much longer.

 

There are short sale specialists available to guide you through the process.  It may take 3 to six months or even longer, depending on the bank, but the time and effort may be worth it for the homeowner whose alternative is foreclosure.  To learn more about if a short sale is the right option for you, contact a reliable realtor and ask for a review.  If you want to get a jump start and find out if a short sale may be the option for you, go to www.YourHouseOptions.com.  Your inquiry will be handled with the utmost respect and integrity.

 

Next time we will address a deed in lieu of foreclosure.

 

Remember, there are always options.  Foreclosure does not have to be the only way out of a temporary financial difficulty.

Merits of forebearance vs. a short sale

by Doug & Gwen Campbell at Sun Bay Associates

 

Last time we talked about the forebearance of mortgage agreement.  Today we will briefly address the merits of forebearance compared to a short sale.  For specifics, be sure to consult a real estate attorney in your area.

 

The biggest benefit to a forebearance agreement is the postponement of the monthly mortgage payment and the potential to keep the house if all agreed payments can be made.  However, if the borrower cannot make the agreed payments, and repay the delinquent balance within two years (or the agreed time frame) the house will still go into foreclosure.  Also, interest continues to accrue on the outstanding loan during the forebearance period.

 

The main benefit of a short sale is having the bank agree to settle the mortgage for less than the amount owed.  This may even preserve the borrower-homeowner’s credit rating.  The greatest disadvantage to a short sale is that because it is dependent on the bank to approve acceptance of an offer for less than the amount owed on the mortgage, this process may take months.  The borrower’s credit rating may be negatively affected, but usually for two years or less as compared to seven years or longer for a foreclosure.

 

Next time, we will address the short sale process in a bit more detail..

 

Remember, there are options to foreclosure.  To learn more about a short sale, visit www.YourHouseOptions.com.

 

 

 

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Photo of Gwen and  Doug Campbell - The Campbell Team Real Estate
Gwen and Doug Campbell - The Campbell Team
at Keller Williams Realty
30522 US Hwy 19N, Suite 107 S
Palm Harbor FL 34684
Doug's Cell 727-741-4189
Gwen's Cell 727-741-7260
Fax: 888-447-7908