Deed in lieu or foreclosure

Deed in lieu or foreclosure

Assure America Title Insurance Company is working with different borrowers who show interest in conveying their properties back to the bank via a deed-in-lieu or foreclosure.

What is deed-in-lieu of foreclosure?

It is a deed instrument in which a borrower conveys all his interest to the lender in a real property. This is done to satisfy a loan in default and avoid foreclosure proceedings.

If a deed-in-lieu has to be considered, the indebtness should be secured by the real estate being transferred. It is necessary that both the sides enter into the transaction voluntarily and in good faith. The settle agreement must have total consideration which should be at least equal to the fair market value of the conveyed property. In case, the outstanding in-debtness of the borrower is higher than the market value of the property, the lender may not proceed with the deed-in-lieu of foreclosure.

With this deed-in-lieu of foreclosure both the borrower and lender gain some advantages.

For borrower:

  • Releases of debt: this immediately release the borrower with the all the in-debtness to the bank/lender.
  • Public eye: the borrower can protect himself from any type of public notices of foreclosure proceedings
  • Generous terms: most of the times, the borrower receives much better terms by utilizing deed-in-lieu of foreclosure due to the bank’s or lender’s expense of a foreclosure.
  • Credit: a borrower will have much less impact to your credit.

For lender:

  • Reduction in time and cost of repossession
  • Reduced risk of borrower revenge like metal theft and vandalism of the property
  • Some additional advantages if the borrower subsequently file for bankruptcy

It is true that the economy is taking very tough turns and at this time, it is quite difficult for an individual to own a property. However, just because you are going through some tough times, you should not give up completely. You can avoid the foreclosure by taking the best possible actions.

As the deed-in-lieu has minimal impact on your credit and the personal financial situations will also change with the economic changes, again it will gradually become easy to own a home.