When facing a possible foreclosure, homeowners can vary considerably in what matters most to them when it comes to resolving the situation. For some, their highest priority is keeping their home. Meanwhile, for others, things such as quickly getting themselves in a place where they can start putting their financial state back in order take up the top of the priority list.
Also, situations involving potential foreclosures can vary considerably in what sorts of methods for dealing with the matter are a reasonable possibility for a homeowner.
So, there are certain situations in which a homeowner facing foreclosure may want to look into foreclosure alternatives that would still involve them letting go of their home.
One such alternative is a deed in lieu of foreclosure. This is when a homeowner, in exchange for being cleared of some or all of their mortgage debt, voluntary turns over the property the mortgage is on to the mortgage lender.
There are some key differences between foreclosure and this foreclosure alternative. One of the big ones is that a deed in lieu of foreclosure involves a private arrangement between a homeowner and a lender rather than foreclosure proceedings. This could allow a matter to be resolved more quickly and more privately. So, there are situations in which a deed in lieu of foreclosure could prove to have distinct benefits for a homeowner over a foreclosure.
Of course, this foreclosure alternative has the disadvantage of, just like a foreclosure, resulting in a homeowner no longer having their property. There are some other downsides this method can have. Additionally, there are certain situations in which a deed in lieu of foreclosure really wouldn’t even be an option on the table.
So, this foreclosure alternative is certainly not for all mortgage struggles. Just like all foreclosure alternatives and foreclosure prevention methods, many things can impact whether a deed in lieu of foreclosure would be well-suited for a particular homeowner’s situation.
Also, when this foreclosure alternative is used, the specific terms of the arrangement matter considerably.
So, when a person is considering pursuing a deed in lieu of foreclosure, they should consider consulting with an experienced foreclosure prevention attorney about whether this foreclosure alternative would make sense in their circumstances and what pursuing this particular foreclosure alternative involves.
Source: Texas Young Lawyers Association and the State Bar of Texas, “Facing Foreclosure,” Accessed April 11, 2016