For more information on Deed in Lieu or Deed in Reduction or Modification in Lieu of foreclosure, visit www.deedinreduction.com

I think the DIL is the same as a foreclosure but instead of forcing the bank to go through the long, expensive legal process of foreclosing through the courts, you just voluntarily turn it over.

They can (and will) still sue for the difference between what you owe and what the property brings when they sell it. You might be able to get the bank to give you an unsecured personal loan for the difference. Or, if you're lucky, you can offer a DIL "without recourse" which basically means they're taking the house as settlement of the debt in full.

If you're just upside down but not behind on the note and not facing an eminent foreclosure, they're not going to take your house. They don't want it and they're not going to let you use them as a "buyer" for the property just so you don't have to deal with it.

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Denton Real Estate is the premiere website for home buyers in the North Texas area. If you're looking for Denton, Tx Real Estate, find your way home at DentonRealEstate.com.

Also, FYI,

The general order for ditching properties is:

Traditional Sale
1) sell it for a profit or break-even
2) bring cash to closing to pay the difference
3) take out a personal loan of some type to pay the difference

Short Sales
4) get the lender to accept less than the payoff as settlement in full
5) get the lender to release the lien and let you pay THEM the difference on installment

Foreclosure
6) Deed In Lieu (voluntary repossession)
7) Foreclosure (forced repossession)

There are plenty of good solutions available as long as you're still current on the mortgage. Once you start getting behind, your credit starts going bad and a lot of the good solutions (refi, personal loans, etc.) go out the window.

Most lenders won't work too hard on the short sale unless you're already late or behind. They'll make sure your credits nice and trashed before they let you skip out on a debt.

Some people will file for bankruptcy during the foreclosure process. This slows things down but you're just postponing the inevitable ... plus, you end up with a foreclosure AND a bankruptcy on your record.

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Denton Real Estate is the premiere website for home buyers in the North Texas area. If you're looking for Denton, Tx Real Estate, find your way home at DentonRealEstate.com.

Ha. Didn't notice how old this thread was. :-)

Looks like somebody brought it back up.

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Denton Real Estate is the premiere website for home buyers in the North Texas area. If you're looking for Denton, Tx Real Estate, find your way home at DentonRealEstate.com.

Deed in Reduction & Modification in Lieu are both working platforms on which the home owner would negiotiate a new amount owed for the home instead of the bank taking the home back and trying to resell. There are a lot of cost associated with the foreclosure and resale of properties that the bank will have to absorb. If the bank wants to sue for the difference, there are also costs associated with that lawsuit usually ending with a bankruptcy and there are no winners. Deed In Reduction & Modifcation In Lieu are programs that create win - win - win situations for the home owner, the bank, and the economy.

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Jason Ballotti
Deed In Reduction
Modification In Lieu
www.deedinreduction.com

Our short sale inventory is through the roof. But lots of agents are complaining about half of them aren't closing. Short Sale looks much better on your credit then a foreclosure.

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Alex G.
Portland Real Estate and Vancouver Washington Real Estate. FREE LIST OF BPO COMPANIES

Your credit report is negotiable with the lender. Most of the negotiations we have seen with our platform, the borrowers credit stays in tact due to the fact the lender recognizes that they are taking a proactive approach to satisfying a debt even though the debt is not always satisfied as originally agreed when the property was purchased.

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Jason Ballotti
Deed In Reduction
Modification In Lieu
www.deedinreduction.com

I was observing the information in this forum and it seemed to me that some of the participants should not be recommending this course of action to the sellers they are representing since they were unsure of its consequences.

As professionals we are required to inform only of what we are sure of and recommend the customer to someone else if we are not. A good real estate attorney can help the average seller and/or buyer for alot less than one might expect and they are usually well worth the added expense.

To make notation to the comments about a Deed In lieu of Foreclosure. The lender does not have to accept the release and the release does not occur unless and until the lender does, and this may take some time.

The payments that are accumulating do not just dissappear despite what one might think, this must be negotiated with the lender as well as all the other minute details involved in the process.

The seller must spell out that the bank has "No Recourse" or else the bank may have just that, in accordance to the orginal documents signed at closing.

If the property is not worth the amount due, then it is quite possible the lender will say no to the deal in its entirety, unless the seller can demonstrate that the lender will not take on a tremendous amount of debt in the course of disposal.

"DEED IN LIEU OF" is a non-performing asset for the lender and just as a foreclosure looks bad on their books. It is quite possible that the mortgagor can rework the entire loan arrangement and make more favorable terms with the lender, and save their credit and home at the same time.

Banks don't like to own real estate, and the reasoning is simple, the FED regulates what they can own and how much they can own and how much of their totals can be defaulted assets and all this plays a big part on their ability to lend.

Banks lend, period! If they take too many defaults then they must raise their reserves which creates a imbalance on their books...not good for them.

The seller will also suffer from this or any adverse action simply because future lenders will assign a high risk of default to their profile. Keep in mind FICO is not everything. Lenders use personal assessment strategies as well and if your credit shows a "DIL", well what would you think if you were the lender?

SO... if you have a seller who is struggling and you are in the position to offer advise, the best advise (in most cases) is not foreclosure, deed in lieu of, or abandonment... the best advise is negotiation!

Usually the seller/owner circumstances can change, if they are sincere to make the change. Some will not and will only get worse, we can't help those people except to sell the property and they would be better off with a short-sale than a foreclosure.

It is a tricky area that we are now in and you should use caution when advising these people on anything, because the culpability is extremely high for you.

So CYOA folks... be careful out there! Thanks for the opportunity to write.

Well said. Also, recommend getting as much education on a subject as you can before you make any decisions. Go to http://www.deedinreduction.com to see the difference between Deed in lieu and Deed in reduction and Moidification in lieu.

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Jason Ballotti
Deed In Reduction
Modification In Lieu
www.deedinreduction.com

In addition to obtaining a judgement, they can attach wages, bank accounts and property (even in Florida). Usually they will not go this far, but living in FL, you will have plenty of notice of the measures they are taking. They will have to serve you by summons and you will have 20-30 days to respond etc... If they try to pursue a garnishment, bankruptcy is an option.

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Katrina E. Rief-D'Errico
www.FloridaGeorgiaHomes.com