Deed In Lieu Of Foreclosure Can Stop Foreclosure Process

When foreclosure problem arises homeowners cannot afford to keep their property

. They may not have enough equity or not able to sell the house or lender may not accept short sale. Owners may have tried all these things but may have lead to failure. So homeowners may think of giving away the property to lender. Homeowner may give the property back to the lender by using a deed instrument called a deed in lieu of foreclosure.

Deed in lieu is an agreement between the borrower and the bank wherein the bank will accept the property as payment in full for the mortgage. Once the deed is executed, ownership of the property will transfer to the lender and the homeowner has to move out of the property. Homeowners may have tried everything possible to stop foreclosure. But when nothing worked out, last resort may be to go in for deed in lieu of foreclosure.

Using a deed in lieu of foreclosure may help owners from the pain of foreclosure process. By following this method owners may not save their house but it can provide a mutually beneficial solution to the problem with the lender. The homeowners may have to give up the title to the property, but this may be a better solution than having it forcefully sold out from under them at a county sheriff sale.

A deed in lieu of foreclosure may not affect foreclosure victims credit repot very much which is one of the few drawbacks of using this tactic. Their credit report will show the mortgage loans status as being closed but reflecting the use of a Deed in lieu. This is slightly better than the credit report which would say that loan had been closed due to a full foreclosure. But deed in lieu may affect homeowners credit history indirectly in a number of positive ways.

Deed in lieu is considered better alternative than going through the entire foreclosure process. This means foreclosure victims credit report will show fewer months of late mortgage payments. Instead of showing nine months of late payments and then a foreclosure, the credit history may reflect six months and then a deed in lieu. If homeowner shows fewer late payments, it will become easier to recover. The sooner homeowners get away from foreclosure process, less it will affect the decisions of other creditors to loan them money in the future, including buying a new home.

Therefore, if a deed in lieu is the only option that homeowners left to stop foreclosure, it is probably a good idea to offer it to the bank and just try to move on with their lives. Giving up a house voluntarily is never an easy decision, but it can give the foreclosure victims an escape from the entire process and give them the fresh start and opportunity they need to begin the rough road of financial recovery.

by: Realjeff

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