Question: What exactly is foreclosure? What does Deed in Lieu mean? The market value of my property has decreased. Will my lender accept less than what I owe? How much damage will this do to my credit?
Answer:
Foreclosure-- This is a proceeding in or out of court, to extinguish all rights, title, and interest, of the owner(s) of property in order to sell the property to satisfy a lien against it.
Foreclosure Sale--A sale of property used as security for a debt to satisfy said debt.
Deed in Lieu of Foreclosure-- A deed given by an owner/borrower to a lender to prevent the lender from bringing foreclosure proceedings. The validity of the deed depends to some degree on "fairness" under the circumstances, and adequacy of consideration will be considered.
Remember--If you're struggling to make your mortgage payments contact your individual lender to discuss your options. Depending on your situation, there may be options available to you that you are unaware of. You may qualify for a loan modification or other program. Please don't wait until its too late!! Talk with your lender ASAP.
Short Sale of your property may be another option. A short sale is a sale of property which includes some forgiveness of debt by the lender under a mortgage or trust deed. However, the amount of debt forgiven may be considered income to the Seller and taxable.
A short sale may be less damaging to your credit than other means of debt relief ( speak with your accountant or attorney). Most people whose credit was satisfactory BEFORE, may be able to purchase a home sooner than those who were foreclosed. If your situation has dramatically changed (job loss, divorce, etc) perhaps short sale is an option. Speak with a Certified Short Sale Specialist to determine if a short sale is something you may want to consider. How could you have foreseen a job loss, death in your immediate family, or divorce, etc when you purcashed your home! THERE IS HELP!
Not ALL Agents are certified to complete a Short Sale. Be sure--Ask Your Realtor if they are.
To have your Real Estate Related questions answered, Email Jackie Stewart at jackie.stewart@prudentialselectohio.com
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