Deed in Lieu

 

What is a deed in lieu?
The Deed in lieu is a transfer of the property directly back to the bank. Generally, the Bank will accept a Deed in lieu when the bank’s mortgage is superior to all other claims, the borrower is in default and there is no viable buyer of the property.

 

Why is a deed in lieu good for me?
A Deed in lieu stops the foreclosure and collection process. It also prevents a deficiency judgment from being entered against you (this is part of the agreement). A deficiency judgment is a judgment that covers the difference between the home’s value and the amount of the mortgage. For instance, if the home at foreclosure sale brings $150,000 at the sale but the mortgage is $200,000.00, you, the borrower, could be liable for the shortfall. The deed in lieu will prevent that from happening.

 

Why is it good for the bank?
A deed in lieu allows the bank to avoid the timely and costly procedure of going through a foreclosure. It also allows them to place the home immediately on the market for sale.