| Many of our clients are confronted with trying to | | | | balance of what you owe the lender, you may |
| sell a home out of necessity, or just because | | | | opt to do a deed in lieu of foreclosure. Generally |
| they do not like it any more. Because of the | | | | you can only have a first mortgage on the home, |
| so-called mortgage crisis and other problems in | | | | and you have to make an effort to sell your |
| our economy, it is no secret that the value of | | | | home first. |
| homes in many parts of the United States has | | | | By doing a deed in lieu of foreclosure, you are |
| declined; some areas more drastically than others. | | | | offering the lender to accept what the home will |
| With that decline, many people are now finding | | | | bring along with the deed to your home, leaving |
| they owe more on the home than they can sell it | | | | you free of the mortgage. For instance, if you |
| for. Some people even have vacation homes or | | | | owe $300,000, but only receive offers for |
| homes they have left behind in a career move | | | | $290,000, the lender may agree to take the |
| that they cannot afford payments on. Here are | | | | offer along with the deed, and write off the |
| some steps to take if you find yourself in this | | | | $10,000 balance, releasing you from the home. |
| situation. | | | | The lender avoids the time and cost of |
| Behind on Payments | | | | foreclosure in this instance. |
| If you are behind on your mortgage, lenders are | | | | Short Sale |
| generally willing to help you with one of three | | | | Another option is to negotiate a short sale. A |
| options. These include temporarily reducing or | | | | short sale is a settlement with your lender to |
| waiving payments altogether, setting up a | | | | accept less than what is owed on the property. |
| short-term repayment plan, and adding the unpaid | | | | The lender does have some responsibility for |
| balance to the principle of your current loan which | | | | lending you money that they should not have |
| increases your payments slightly. The lender does | | | | given you. Of course, the ultimate responsibility |
| not want to foreclose on any homes, but | | | | lies on you for having signed up for the ride. |
| especially so in today's markets where | | | | Essentially, you sell the home for what it will bring |
| foreclosures are at an all-time high. | | | | and the lender agrees not to go after you for the |
| The "loss mitigation" department is who you need | | | | deficit. A settlement will most likely damage your |
| to talk to if you need to work out a plan. Be sure | | | | credit score, but getting released from a home |
| you can follow through on the plan you develop, | | | | that you cannot afford is the best course of |
| or the lender will not have much sympathy for | | | | action. You may be liable for taxes on the amount |
| you the second time around. Even if you cannot | | | | that was settled, but I would rather pay taxes on |
| make the payments, corresponding with your | | | | $50,000 than an entire $50,000 debt. |
| lender is still the right thing to do. Tell them what | | | | Foreclosure |
| is going on and what they can expect from you | | | | Foreclosure is your last option. In many states the |
| in the future. | | | | lender can go after you for the unpaid deficit, and |
| Quick Sale | | | | a foreclosure will affect your credit for years. Do |
| If selling the home is the right thing to do, make | | | | what you must to avoid a foreclosure, but face |
| sure to put it on the market immediately. If the | | | | reality wherever you are. Do what is right for |
| market is down and it is the right time in your life | | | | your family when it comes to housing and financial |
| to sell, then you need to sell regardless of the | | | | decisions. |
| market. A quick sale is a good option if you have | | | | To help avoid any of these problems in the |
| equity in your home. Make sure to meet with a | | | | future, put down at least 20% (or more) as |
| competent real estate agent to determine how to | | | | down payment on a home, and do not buy if you |
| price your home and what your sale expenses will | | | | need to take out more than a 15 or 20-year |
| include. | | | | fixed rate mortgage. Your payments in this case |
| Deed in Lieu of Foreclosure | | | | should not exceed 25% of your household |
| If your house has been on the market for some | | | | take-home pay. |
| time but has not received any offers over the | | | | |