Deed in lieu of foreclosure programs for homeowners have offered many individuals the opportunity to avoid a formal foreclosure through this type of alternative program when a home loan payment is simply too costly for a homeowner to meet any longer. This option which has been made popular for homeowners through the Home Affordable Foreclosure Alternatives program has been made available to a wide section of homeowners, when qualifications are met, but homeowners with an underwater mortgage may also be able to benefit from this type of foreclosure alternative assistance.
There have been numerous homeowners who feel that short sales may be their only option when it comes to avoiding a formal foreclosure process when they have exhausted all of their foreclosure prevention opportunities. While many servicers require that homeowners attempt to qualify for a home loan modification or other foreclosure prevention program, and there have been some cases where homeowners had to list their property and attempt to sell their home when an underwater mortgage and negative equity were causing problems, but these deed in lieu of foreclosure plans may also be available if a homeowner is unsuccessful at a short sale.
Obviously, negative equity has been a major problem for many across the nation as there are reports that home prices may continue to drop in the early part of 2011 before they begin to increase. There have also been some indications that certain areas of the nation that have seen a great deal of negative equity problems may not recover for quite some time, which can be troublesome for homeowners who see their home as an investment, but this is more of a problem for homeowners who may be suffering due to economic factors and are unable to meet payments on their home loan as a result of the decrease in their property value.
Yet, those who have been able to qualify for foreclosure alternative programs like a deed in lieu of foreclosure plan have escaped their underwater home loan situation without doing a substantial amount of damage to their credit score, which usually accompanies a foreclosure. Homeowners who successfully complete a deed in lieu of foreclosure plan with their mortgage servicer are usually in a situation where, if they present the home without any liens or mortgages, will be forgiven of the remainder of their mortgage debt as the deed in lieu of foreclosure will be counted as full payment by their servicer.
However, these types of programs are usually not easily obtained by homeowners due to the fact that there have been many who have attempted to take advantage of these foreclosure alternative initiatives and simply escape their home loan when in truth they can afford their monthly payments. For this reason, servicers will, again, usually require that homeowners apply for assistance through home loan modifications or attempt to short sell their property before they may take the surrender of a homeowner’s deed as full payment for the amount they owe on their home.