WHAT IS A DEED IN LIEU (DIL) OF FORECLOSURE?

Many New Jersey Home owners are facing Foreclosure and are unsure about their options. Many are at the point of no return and have been in their homes in excess of 18-24 months without making a mortgage payment and are feeling afraid that the end is near.  In most cases the lender will reach out to the borrowers and discuss a few options; one option is a (DIL) or Deed In Lieu of Foreclosure; also known as a ‘friendly foreclosure’, a deed in lieu allows the homeowner to return the property to the lender rather than go through the foreclosure process.  It is a voluntary process and Lender approval is required for this option.  The homeowner must also vacate the property in most cases 60 days after the paperwork is completed.

 

Advantages Of A Deed In Lieu Of Foreclosure:

• A deed in lieu of foreclosure will benefit the lender by saving costs of a  formal foreclosure proceeding and allowing them to resell the property and avoid further expenses and financial hardship.

 

• Eliminate or reduce your remaining mortgage debt, in most cases the lender will not pursue the balance owed on the mortgage and allow the home owner to simply walk away.  In some cases cash incentives are offered to help home owners get a fresh start in moving on from the situation.

 

• Avoid the negative impact of a foreclosure, the Foreclosure can be the most devastating event to happen to a person, its important to avoid the embarrassment of a public auction, the destruction of the home owners credit and the stress that is created when you have to go through such a life changing event.

Drawbacks to a Deed in Lieu of Foreclosure:

Always seek legal advice when dealing with your lender, whether it be a Short sale, deed in lieu of foreclosure, or a Foreclosure.

• What is the Effect on credit?   A deed in lieu will affect your credit report. Some sources say the affect on credit is identical to that of a full-blown foreclosure, but cannot be determined, until after it is all said and done. Remember each individuals situation is different, so Don’t believe everything you read online.

 

• In most cases it is almost impossible to obtain a  deed in lieu if you have a  second or third mortgage, home equity
  loans, or tax liens against your property.

 

• Ability to buy another home.  There is no such thing as giving a deed in lieu and turning around to immediately buy another home for at least 4 years . That is based on there guidelines regarding any applicant that has had a deed in lieu on file within that time period.  There are exceptions (but I would not count on those) generally its 4 years without extenuating circumstances, 2 years with extenuating circumstances. They continually make changes to guidelines.

 

*If you go the route of a Foreclosure (which I hope you do not)  the waiting period to buy again is 7 years without extenuating circumstances, 5 with, so there are advantages to going this route.

• Make sure you obtain a Release of liability; the deed in lieu should specifically state that you are being released from liability to repay the loan or the balance post sale.

 

If you or someone you know are facing financial difficulties for any reason and need help…contact us today! Remember

you are not alone…

you can visit us on the web at http://www.njshortsalehelp.info/ email us at: info@goodbuyhomesnj.com or call us anytime at 973.849.6907.