Tod,
This sounds like a mess. Deed in Lieu is not an option But a Short on the first and second might be. I am not sure I can help but would be happy to disuse some options.
Brad

I agree with Fred, with that scenario a deed in lieu won't work. The 1st will agree to it, but the second wont. With that big of a split on your mortgages there is no way the second will give up all 95k so that you can give the entire house to the first. A short sale should be very possible though, it is not a huge hit for the second and definitely a much better scendario for them than to loose their entire investment if the first forecloses. Here is the catch though, most lenders iwll not agree to short it unless you are late and in this scenario the second may very well need that "incentive" to be willing to short it. I know thats pretty rough but banks are banks.

I agree with Joanna. Try to short sale it first. 99.99% of the time, they will not go for a deficiency judgement and you will just have your credit hit because if the 2nd, not the first.

If you can still make the payments on the first and 2nd, go ahead and do so until you sell. The 2nd is going to be hit for the balance and that will hurt your credit.

Also, the 2nd mortgage company won't want to take the house deed in lieu because they would still have the 2nd. The first lender is still ahead of the game and will not take it either.

Best of luck.

Hi Todd, Deed in Lieu of Foreclosure should be the last resort. Talk to a local Realtor about listing your property and asking both banks to work with you on a possible short sale.

Good question Tod. You may have the ability to do a deed in lieu and have the second take the hit. Have you talked to an attorney who has experience in real estate transactions, foreclosures etc? There maybe a simple method here but you need to talk to an attorney first. Try to find the local real estate hotline or complaint number for your area and call them. They are ALWAYS attorneys AND Realtors/Brokers so they may be able to answer you for free! Hope this helps...