Deed in lieu of foreclosure plans are one of the alternative options that homeowners may have if they are unable to sell their home under a short sale agreement, which has been a popular practice among many individuals over the past months. Underwater homeowners and other difficulties have led many to either find a home loan modification program to be unhelpful or unaffordable, which has led homeowners to face foreclosure if no other options had been presented. However, short sale programs and deed in lieu of foreclosure plans were offered to individuals who were in these particular situations, and wanted to avoid a formal foreclosure after trying to save their home but had come up short.
While there have been indications that many servicers may begin to up their short sale practices in the hopes of helping more homeowners avoid foreclosure, there is concern that with a great deal of homes sitting empty within the housing market, there may not be a great deal of buyers who will take advantage of short sales and in cases where a home has lost value, homeowners have little incentive to remain if they are struggling to make their mortgage payments on a home that is worth less then their mortgage value.
However, these deed in lieu of foreclosure programs are another route which homeowners may take through the Making Home Affordable Program as this path allows homeowners to surrender the deed to their home, provided certain conditions are met, and will allow a homeowner who has been unsuccessful in trying to sell their home to simply be forgiven of the remaining debt associated with their mortgage. Also, some homeowners have been given assistance through a relocation fund which can offer up to $3000 to a qualifying homeowner who participates in a deed in lieu of foreclosure plan.
It’s understandable that many homeowners would much rather save their home through a modification program or other mortgage payment reduction efforts, but when an underwater home loan has begun to be problematic, homeowners have often tried to sell their home loss so that the property will not simply be sitting empty and their mortgage servicer will forgive them of the remaining obligation they have. Yet, again, selling a home is not always easy in these situations, so the deed in lieu of foreclosure program has been implemented as a way to allow homeowners who are unsuccessful at either getting a modification or selling their home to find foreclosure avoidance.
While there are some general eligibility requirements that homeowners must meet, like having lived in the home for 12 months, have proven they are experiencing financial hardship, and their property must be void of any other mortgages, liens, and encumbrances, but the homeowners who are attempting to participate in a deed in lieu of foreclosure plan are often prompted to contact their servicer as their mortgage situation will obviously be particular and there may be need of consultation to make sure they qualify for this program.