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Deed in Lieu of Foreclosure

A deed in lieu of foreclosure can be an effective alternative to foreclosure. This is a process in which the homeowner(s) voluntarily transfers their real property over to the lender after defaulting on a loan. When other options fail or are simply not possible, a deed in lieu may be the only way a homeowner can avoid having a foreclosure on their credit report.

What Happens After a Deed in Lieu of Foreclosure?

After the property owner surrenders ownership of the property by way of a deed in lieu of foreclosure, the mortgage lender will quickly attempt to sell the property in order to recover part or the entire amount initially borrowed.

A deed in lieu of foreclosure is a transfer/sale whereby ownership of the real property from the property owner/borrower to the mortgage lender. It is important for borrower(s)/property owner(s) to be aware that mortgage lenders are typically unable to recover the full amount owed to them under the terms of a defaulted mortgage loan through the "distressed" sale of the mortgaged property. This is particularly true in light of the downturn in the real estate market in the last several years. Without an agreement to the contrary, a property owner(s)/borrower(s) stands to be sued by the lender in what is called a deficiency lawsuit, which represents the balance due on the defaulted mortgage loan after the property is sold by the lender to a third party. The homeowner(s) should take whatever steps necessary to assure that the lender cancels any remaining debt due on the underlying mortgage in return for the borrower transferring title of the property to the lender. If the lender does not agree to waive any unpaid balance due on the mortgage after the transfer of the property, the property owner/borrower may be faced with a deficiency lawsuit by the mortgage lender.

Looking for a lawyer for a deed in lieu of foreclosure case in Hackensack?

An attorney experienced in personal bankruptcy will have much more leverage in negotiating a waiver of any potential deficiency from the lender then would a homeowner dealing directly with the lender.

If a deed in lieu of foreclosure is an option that you would like to explorer further, please call or contact our firm today for a free consultation.

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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The Law Office of Marc G. Alster - Hackensack Bankruptcy Attorney
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