What is a Deed in Lieu?
Many people ask Shenoah Grove of Hippie Hollow Homes if they should pursue a deed in lieu of foreclosure instead of going through other alternatives.
A deed in lieu of foreclosure is when the homeowner, who is unable to continue making mortgage payments, simply gives the deed back to the bank instead of going through the foreclosure process.
There are a couple of problems with the deed in lieu of foreclosure process. The biggest problem is that a lender will most likely make you work for the deed in lieu of foreclosure. What does this mean? Lenders seems to consider the deed in lieu of foreclosure to be the last resort and will make you try other alternative prior to giving the deed in lieu of foreclosure.
Deed in Lieu of Foreclosure Success Rate
For example, a bank will typically make you try a short sale first. So then you spend the next 6-12 months trying to negotiate a short sale. If it fails, then the bank may consider the deed in lieu of foreclosure. However, there is really no rhyme or reason as to whether or not they will accept it. Most mortgages dictate that for the bank to take back the house they must do it through the foreclosure process.
If you live in Austin or San Antonio Texas and are considering a deed in lieu of foreclosure, it is really in your best interest to consider some other alternatives, such as selling with owner financing or performing a short sale.