Deed In Leiu Of Foreclosure

When you have exhausted all avenues of saving your home, your credit, and your reputation, do not despair, there still may be an option other than foreclosure. Millions in the United States today are facing the facts: you own a home that has less value than the mortgage, the mortgage payments have increased, your cash flow has decreased, and you are in default of your mortgage payments. With imminent foreclosure and eviction there is an opportunity to keep you and your family in a home with a Deed in Lieu of Foreclosure option.   

 What is it a Deed in Lieu of Foreclosure?
A Deed in Lieu of Foreclosure, or DIL, is a last ditch effort currently espoused by the Obama Administration, that transfers a deed, the title or ownership of a property, from the borrower (mortgagor) to the lender (mortgagee) in lieu of the payment owing. This method puts the decision in the property owner’s hands to make good on the loan and avoid the expense and embarrassment of foreclosure. Now, rather than foreclose, you have the opportunity to write the ownership of the property back over to the bank or loan institution in place of the mortgage payments that you cannot make. 

Benefits to Borrower
The most important benefit to you, the debt laden borrower who can see no way out, is that you will be immediately released from the majority if not all of your obligation to the debt of the defaulted mortgage. You also avoid the embarrassment of the public exposure of a foreclosure. The Deed in Lieu of Foreclosure can also offer kinder and less astringent terms than a foreclosure which is severely damaging to your credit. The DIL offers the opportunity to maintain a measure of dignity and decent credit so that you can rebuild your life and provide a safe and prosperous home environment for your family.  

Benefits to Lender
For the Lender, the benefits may not be as great, but they do exist. Repossession is a costly procedure for the financial institution in both cash flow and time. Time is critical to the Lender. If the debtor files for bankruptcy in mid process, then the property and the money owing can be consumed by years and court proceedings, whereas with a Deed in Lieu of Foreclosure, the conveyance, once agreed upon, is immediate.

Qualifications
To qualify for a Deed in Lieu of Foreclosure option, the borrower must satisfy the following criteria; be in default of the mortgage payment, be demonstrably not able to pay the monthly payments, have proven inability to sell the property, have no other default mortgage, and must be freely and voluntarily entered into by both parties as well as agreed upon by both parties. It is up to the lender to determine whether or not the cost of foreclosure is such that a property that has less value than the debt brings balance. 
  
Obama Deed in Lieu of Foreclosure Program
Thursday, May 14, 2009, the Obama administration rolled out a new DIL program in the hopes of assisting the millions of homeowners who face losing their homes because their mortgage debt is far greater than the fair market value of their house. The government is offering financial incentives to lenders in the anticipation that this will encourage them to assume a loss through accepting a home whose value is significantly less than the defaulted mortgage. This addresses the concern that banks would far rather foreclose than lose money.