Certain homeowners are looking into deed in lieu of foreclosure programs which allow a homeowner who is in default to sign their home back over to their mortgage servicer since they are unable to continue making home loan payments. This option has been helpful for many homeowners as certain foreclosure alternative programs have been implemented to assist those who have suddenly come upon difficult financial times.
Programs from HUD and the Home Affordable Foreclosure Alternative program have assisted homeowners in this area in the hopes of allowing them to remove themselves from their mortgage obligations without doing a substantial amount of damage to their credit. While there are some guidelines for these programs which allow homeowners to avoid a foreclosure process, deed in lieu of foreclosure plans may offer homeowners the opportunity to more easily rebuild their credit history than had they gone through the foreclosure process.
While homeowners must occupy the home on which they want to enact the deed in lieu of foreclosure plan, there are some other specifics that must be adhered to before homeowners can take advantage of this foreclosure alternative. Typically, alternatives like the deed in lieu of foreclosure plan are set in place to assist homeowners who have seen a drastic reduction in their income.
Some plans require that the homeowner provide documentation that they have seen a reduction in their household income or an increase in their living expenses, related to factors like medical costs or something similar. While there are some cases where mortgage servicers may provide monetary compensation to the homeowner for costs like moving expenses or to apply towards other liens on the property, homeowners who are able to take advantage of these types of foreclosure alternative plans may be able to avoid the loss of their home to foreclosure in cases where unemployment or a decrease in a home’s value has caused financial difficulties.