Now also known as a “Mortgage Release” (courtesy of Fannie Mae), a deed-in-lieu of foreclosure involves giving the deed of the property to the mortgage holder – that is, the bank.
The surrender of deed takes place at a closing, similar to a standard purchase or sale.
A deed-in-lieu can offer some flexibility in the timing required in vacating the property, with options such as three months continued occupancy, a lease-back from the bank for as long as a year, or up to $3000 in funds for immediate relocation paid by the bank.
The mortgage company will need to see supporting documentation regarding your financial condition, and will need to be persuaded that this is indeed the best option for your circumstances.
Similar to a short sale in one aspect, a deed-in-lieu exposes the borrower to the possibility of a “deficiency judgment,” wherein the mortgage holder can sue for the difference between the amount of the proceeds and the amount outstanding on the loan. Your attorney should insist on a deficiency waiver in a deed-in-lieu agreement, if at all possible.
At Todd Murphy Law, we can help. As a third party, we can discuss the particulars of your situation with your lender, make sure that all supporting documentation is in order, and obtain the most advantageous possible terms for your departure from your residence in a time frame suitable to you.