Deed in Lieu of Foreclosure
Foreclosure, where the bank that issued your home mortgage petitions the court to declare it the legal owner of your house, which you have pledged as collateral on your mortgage loan, is a costly and agonizing process. Almost any other resolution to a situation where a homeowner has fallen behind on mortgage payments is better than foreclosure. Therefore, people who are struggling with their mortgage payments might hurry to sell the house as is in an attempt to get out of their mortgage loan quickly, or they might file for bankruptcy protection in the hopes that the house is an exempt asset under chapter 7. If they start before the overdue mortgage payments have gotten to be too many, they might even be able to modify the terms of the mortgage loan and buy themselves time to catch up on payments. What do you do, though, if you have already tried those options, and none of them will work? What if the bank taking your house is not a question of if but when? For help getting out of your mortgage loan obligations gracefully, contact a Miami foreclosure defense lawyer.
The Second Worst-Case Scenario?
If you are in over your head with your car loan, you can savor every rev of the engine and every incident of road rage until the repo man arrives, or you can act like an adult and drive to the dealership to return the car. In either case, you will end up carless, but the former option is more damaging to your finances. The repossession of a house, that is, home mortgage foreclosure, is several orders of magnitude uglier than the repossession of a car. A snorting tow truck does not haunt your nightmares the way that armed sheriff’s deputies knocking on the door of your home, where you signed your name to close on the sale, do.
If you know you can’t afford to keep your house, you can execute a deed in lieu of foreclosure. This is where you initiate the process of transferring ownership of the house back to the bank. It is also known as voluntary foreclosure.
Should You Borrow Now Before Your Credit Score Tanks?
Executing a deed in lieu of foreclosure works best if you have carefully prepared for your circumstances after returning your house to the bank. For example, you should make plans to move; if you are going to rent an apartment in your name, you should sign the lease before executing the deed in lieu of foreclosure. If you need to take out loans, do it before the deed in lieu of foreclosure, because your credit score will be better, and therefore the interest and fees will be lower.
Work With a Debt Lawyer About Last Ditch Efforts to Avoid Foreclosure
A South Florida debt lawyer can help you if mortgage foreclosure seems inevitable and you want to make the process of losing ownership of your home as painless as possible. Contact Nowack & Olson, PLLC in Miami, Florida to discuss your case.
Source:
investopedia.com/terms/v/voluntary-foreclosure.asp#:~:text=If%20you%20volunteer%20to%20willingly,move%20by%20a%20specified%20date.
