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Jennings Johnson's Blog

By Jennings Johnson | Broker in Wilmington, NC

Deed-In-Lieu of Foreclosure or Short Sale?

Let us call it what it really is, the Wild West! Some of you may know it  as the Loss Mitigation Department of banks. So many questions that get you vastly different answers. This is one of those questions I get a lot. Should I just give it back? Well, let's get a better understanding first.

A deed-in-lieu is the equivalent to a "No Contest" plea in a criminal trial. You just give up on the foreclosure. If there is a foreclosure court case, the judge will still have to schedule a foreclosure sale.

Contrary to popular opinion, a deed-in-lieu does not automatically release you from the debt. This means that your lender could be pursuing you five years later, after you get back on your feet.

There is an application process. You will have to spend between 5 and 10 hours submitting paperwork to your lender before they will approve the deed-in-lieu. Yes, I think it's crazy!

Why should you have to submit paperwork to make it easier for your lender to foreclose on your house? Doesn't make any sense.

Slide over to my blog at http://wilmingtonshortsalerealtor.com to dig into this post and many others.

Jennings

Comments

By Kathy Persha,  Thu Nov 4 2010, 13:21
Jennings, Good and accurate information. I come across so many agents and bank negotiators who think a DIL is a great offer to the homeowner. I always explain to my clients that a Deed in Lieu is just a fancy name for a voluntary foreclosure with all the same bad ramifications. http://kaperproperties.com/

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