During difficult financial times, people may find it difficult to keep up with important payments on their debts. If you are struggling to make ends meet, large debts like credit cards, auto loans, and mortgage payments may be too much to handle, and you may find yourself delinquent on payments after some time. Failure to repay essential debts may result in foreclosure, repossession, and other negative actions.
Many homeowners understand how devastating a foreclosure can be to their livelihood and family, so it is important to explore your legal options if you are facing a dire financial situation. There are options available to persons who are looking to prevent foreclosure. Common solutions include mortgage modification, bankruptcy, and the issue of a deed in lieu of foreclosure.
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Persons who are no longer able to make regular payments on their home loans but wish to avoid going through foreclosure may choose to turn the deed over to their lender through a "deed in lieu of foreclosure". By returning the deed to the mortgage lender, the buyer allows the lender to sell the property in order satisfy the debt. In such cases, the lender may be able to recover some or all of the balance of the loan.
In order to complete the transaction, the property owner must usually sign documents including:
The Agreement in Lieu of Foreclosure Warranty Deed Quit Claim Deed
By signing the documents, the individual turns over rights and ownership of the property in exchange for the lender's agreement to mark the loan note as "paid". The lender may also have to sign a waiver of deficiency-judgment that releases the former owner of any liability for funds that are not recovered in the sale.
While the homeowner may be able to prevent foreclosure and satisfy the terms of the mortgage note by turning the property over to the lender, he or she may still have to pay certain taxes following the transaction. Persons may be required to pay a deed-tax following the transfer of the deed, as well as possible income tax on the debt that is canceled.
Individuals who are going through serious financial troubles, may wish to keep their property and assets rather than return the property to the lender. In such cases, the individual may wish to pursue Chapter 13 bankruptcy or mortgage modification instead of a deed in lieu of foreclosure. In some instances, a deed in lieu of foreclosure may be a better option for persons who fear they will not be able to repay their mortgage note and would rather not keep the home.
If you need assistance with a deed in lieu of foreclosure claim or mortgage modification, visit the Maryland mortgage modification lawyers of Chaifetz & Coyle, P.C.
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