So there can not be any outstanding condo dues or proeprty taxes. Credit wise a foreclosure and a deed in leiu are treated the same. Your credit report will be reduced by 2-300 points. There should not be no issue with federal irs tax because of the 2007 debt forgiveness act. However, there could be state tax for the short fall between value and mortgage balance. You should check this will your tax advisor to ensure this would hold true. When I worked for a mortgage company a 1099 A was filed and not a 1099C was not filed on a deed in leiu so even before theis 2007 act the forgiven income was not taxable at least with the companies ?I worked for the mortgagors completing dil's.
First Weber Group
Certifed Distressed Property Expert
Offering the lender "The Deed In Lieu" of foreclosure would be the very last resort. I understand that every option must be exhausted before a lender will consider this course of action. It is my understanding that the property should be on the market at fair market value for a period of at least 3 months- the trick is figuring out what "fair market value" is! I have reviewed the criteria for a few lenders where a borrower has requested the same.
Income Tax Returns, Pay Stubs, Income/Expense Statements, P&L (If Self-Employed), Bank Statements, etc. It is best to have an open dialogue with the lender- ask for ANY & ALL options that they can offer.
Lenders are very aware of the situation, it is NOT just in BLU- it is happening everywher- just about.
Mott Marvin Kornicki, Broker/Associate
Real Estate In Miami Beach, Florida