Foreclosure in 66618>Question Details

Brett Ellis, Home Seller in Topeka, KS

I can't afford my mortgage anymore. Can I do a quit claim deed to the bank and what is the net effect on me?

Asked by Brett Ellis, Topeka, KS Thu Jun 26, 2008

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If this is the roof over your head, and you want to keep it, you should consider trying to reduce your mortgage pmt so that it IS affordable. We can do that by negotiating a loan modification. If you're resigned to abandoning ship, then a deed in lieu of foreclosure can be negotiated, which shows as paid in full in your credit report and protects you from the lender going after you for their loss. Feel free to contact me to discuss this further (813-600-3428).
1 vote Thank Flag Link Tue Sep 9, 2008
You can modify your loan, i was in the same situation and i modified which saved me from loosing my home. My agents Email was check out your options before you decide
1 vote Thank Flag Link Wed Aug 20, 2008
Brett, I am a REALTOR in Topeka. I have several clients that I am working with that are in your same situation. Please contact Jackie Friese at Housing and Consumer Credit Counseling. She has worked with my clients to help them decide what the best option is. She can work directly with the bank and makes the process much easier than you trying to do it yourself. Your have some other options that I would be happy to discuss with you if you'd like to contact me.
0 votes Thank Flag Link Tue Sep 9, 2008
Talk to your lender, every situation and lender's response is different. They may let you sell it as a short sale (less than what you owe the bank) and walk away with no further obligation - and then yes get a real estate attorney that can guide you when it comes to signing any agreement with the mortgage company and also possibily the lender can work with you to lower your payments. Because I don't think they want you to bail on the mortgage and then leave the home vacant. Foreclosed properties seem to be bringing less and less.
0 votes Thank Flag Link Sun Aug 24, 2008
Deep River's advice is good. Absolutely consult with an attorney before doing anything.

Worst case scenario (and I've heard of this happening): An owner quit claims the deed back to the bank. That means the bank now is the owner of the property. But: Guess what? That wasn't your problem in the first place. Your problem was the mortgage--the IOU that said you'd pay a certain amount every month.

The deed and the mortgage are two separate documents. The bank now owns your property...but the mortgage is still in place. They can still come after you. But, you protest, you don't own the property any more. True. But that doesn't matter; the mortgage does.

Ask Will. He's an investor. If there's equity in the property, an investor like Will may propose a "Subject To" transaction. That's where you give him the deed, but the mortgage remains in your name. The investor promises to make up any deficiency, and to pay your mortgage on time. That way, you'll restore your credit. At some point in the future, the investor will sell the property, thereby cashing you out and picking up some profit for himself. It can be risky for the seller, but it's done all the time...and often successfully. At least in that case, you'd have some possibility of getting out of the mess while avoiding a foreclosure. Just deeding the property back to the bank doesn't even give you that assurance.

If there's some equity in the property, you might even consider selling it conventionally. If there's little or no equity, a short sale is the more likely scenario. Or even, as I suggested above, a Subject To. But, first, talk with an attorney.

Good luck.
0 votes Thank Flag Link Thu Jun 26, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
I am a broker and manager at Coldwell Banker Griffith and Blair in Topeka. The answer from Deep River in Daytona Beach is right on all the way. Please follow that advice!
0 votes Thank Flag Link Thu Jun 26, 2008
It is possible. It is called a 'Deed in Lieu of Foreclosure'. Call your bank and ask them what your options are and see if they would except it. If they say you need to sell your house but you cannot either sell it in time, sell it for what's owed or any other reason my company may be able to help you out and BUY YOUR HOUSE. Even if it's in foreclosure, needs repairs, there's no equity or a number or reasons. If you would like to see how we can could help you out by Purchasing your property you can contact me and I'd be more than happy to explain in detail any more questions or concerns.

Will Robles
0 votes Thank Flag Link Thu Jun 26, 2008
You should consult an attorney for specific state laws governing your intentions.

From a lending perspective, the action you describe sounds like a "Deed in Lieu of Foreclosure" which means you voluntarily surrender your home to the lender. Filing a Quit Claim deed ceding ownership to the lender is fraught with peril without careful advice from a real estate attorney. Done improperly, you could wind up giving away your home without any compensation or concession from the lender.

Alternative choices are a short sale, in which the bank agrees to accept a loss on the amount owed to facilitate an immediate sale of your home to another party.

In either case, the net effect is foreclosure. Some states permit the lender to sue for a deficiency judgment for the amount of the loss the lender incurs.

You may also incur a tax liability for the amount of the lender's loss.

All of the above will have a negative long term impact on your credit history and will make it difficult and expensive to obtain credit for years to come.

First thing to do is to contact your lender's Loss Mitigation department and request a hardship package for a short sale, loan modification, or short pay off to refinance your home.

Second thing to do is to contact a local nonprofit agency that specializes in helping homeowners facing foreclosure.
0 votes Thank Flag Link Thu Jun 26, 2008
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