Deed In Lieu Of Foreclosure
A deed in lieu of Foreclosure(DIL) which is often referred to as a deed in lieu(DIL) is the legal process where a mortgage company takes back a property from a homeowner with consent. A DIL is usually done for homeowners who are simply unable to keep up with their mortgage payments, and they have had no luck trying to sell their home to a 3rd party. A deed in lieu is done to avoid a foreclosure sale. A foreclosure sale is costly to a mortgage company and they try to avoid it as much as possible, but there are times when they have no choice but to foreclose on a home for non payment. A Deed in lieu can sometimes take the place of a foreclosure occurring, which is a good thing if your lender agrees to one.
The usual order of a borrower progressing to a DIL of foreclosure starts with some unusual or unfortunate event such as: unemployment, death, divorce, curtailment of income, among other things. We all know most homeowners do not buy a home intending to go past due on their mortgage payments. Once a borrower starts to go past due on their mortgage payments they are likely to try to get some kind of mortgage assistance with some persistence and general mortgage knowledge. They often start off by requesting for a loan modification, and if that does not work out for them, they might go on to request a short sale followed by a DIL. A mortgage company has to agree to take back a property from a borrower, by doing so this saves the homeowner from going into foreclosure sale situation and getting that stigma on their credit report.
If a DIL is approved the mortgage lender will arrange for the homeowner to vacate the property by a set date. The borrower then walks away and is no longer obligated, or responsible to make payments on their mortgage anymore. A DIL is viewed as a settlement on a homeowner’s credit report, unlike a foreclosure. A foreclosure is extremely damaging to anyone’s credit. Homeowners that have been granted a DIL are consider to be rather fortunate, because most borrower would not be granted this option but a small percentage is; this is a good option if loosing the property is not a big deal to go through for the person loosing the property and they can move on.
