CA Deed In Lieu of Foreclosure

What is a CA Deed in Lieu of Foreclosure?

A CA Deed in Lieu of Foreclosure is a deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings. The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The principal advantage to the borrower is that it immediately releases him/her from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the effect and credit damage of a foreclosure proceeding and may receive more generous terms than he/she would in a formal foreclosure. Advantages to a lender include a reduction in the time and cost of a repossession, and additional advantages if the borrower subsequently files for bankruptcy.

Because of the requirement that the instrument be voluntary, lenders will often not act upon a deed in lieu of foreclosure unless they receive a written offer of such a conveyance from the borrower that specifically states that the offer to enter into negotiations is being made voluntarily. This will enact the parole evidence rule and protect the lender from a possible subsequent claim that the lender acted in bad faith or pressured the borrower into the settlement. Both sides may then proceed with settlement negotiations.

Neither the borrower nor the lender is obligated to proceed with the deed in lieu of foreclosure until a final agreement is reached.

CA Deed in Lieu of Foreclosure

With a CA deed in lieu of foreclosure, you give your home to the lender (the “deed”) in exchange for the lender canceling the loan. The lender promises not to initiate foreclosure proceedings, and to terminate any existing foreclosure proceedings. Be sure that the lender agrees, in writing, to forgive any deficiency (the amount of the loan that isn’t covered by the sale proceeds) that remains after the house is sold.

Before the lender will accept a deed in lieu of foreclosure, it will probably require you to put your home on the market for a period of time (three months is typical). Banks would rather have you sell the house than have to sell it themselves.

Benefits to a deed in lieu. Many believe that a deed in lieu of foreclosure looks better on your credit report than does a foreclosure or bankruptcy. In addition, unlike in the short sale situation, you do not necessarily have to take responsibility for selling your house (you may end up simply handing over title and then letting the lender sell the house).

Disadvantages to a deed in lieu. There are several downfalls to a deed in lieu. As with short sales, you probably cannot get a deed in lieu if you have second or third mortgages, home equity loans, or tax liens against your property.

In addition, getting a lender to accept a deed in lieu of foreclosure is difficult these days. Many lenders want cash, not real estate — especially if they own hundreds or thousands of other foreclosed properties. On the other hand, the bank might think it better to accept a deed in lieu rather than incur foreclosure expenses.  Typically a lender will want to see that you were unable to short sell the property first.

Beware of tax consequences. As with short sales, a deed in lieu may generate unwelcome taxable income based on the amount of your “forgiven debt.”

Who can qualify for a Deed in Lieu of Foreclosure?

Anyone faced with a certain foreclosure may be able to complete a CA Deed in Lieu of Foreclosure but it should only be treated as a last resort. You should be aware of all your options before going through with a Deed in Lieu of Foreclosure or Foreclosure.

Contact us today to find out whether a CA Deed in Lieu of Foreclosure, foreclosure or other option would be best to give you a clean start now.

CA Deed in Lieu of Foreclosure Process

When a homeowner retains our office to assist them in applying and negotiating for a deed in lieu we handle the entire transaction for them.  The deed in lieu of foreclosure process begins like most other negotiations with the lender, a complete financial package with documentation relating to income, expenses, assets and debts must be firs reviewed and edited by the attorney and then submitted along with the package. The financial package submitted must tell the borrowers story on paper in a compelling manner including the circumstances which led to the inability to afford payments. Next the lender usually schedules a comprehensive deed in lieu of foreclosure inspection of the property and eventually determines if they want to accept the deed to the property.

Advantages of a Deed in Lieu of Foreclosure

A deed in lieu of foreclosure can offer several advantages to both the homeowner and the lender. The objective, for the homeowner, is to have the lender waive any “deficiency” from the sale of the property. A deficiency is the amount left unpaid on the loan after the property is sold for less than what is owed against it. In many situations, this is a distinct possibility; in others it is more challenging.

Most lenders have very strict requirements and qualifications for a deed in lieu of foreclosure, and it is not something homeowners can typically accomplish by themselves. The deed in lieu of foreclosure process can be long and burdensome and most homeowners attempting to negotiate on their own behalf simply don’t have the time and industry expertise to follow through.  In addition many lenders will fail to file the appropriate deeds and reconveyances even months after the final documents have been signed giving the legal rights to the property.  This is something that needs to be carefully watched and dealt with accordingly as it can cause a lot of issues.

Let Our Experienced Foreclosure Attorneys and CA Deed in Lieu of Foreclosure Attorneys Assist You

The attorneys at StoneCrest Law Firm have years of experience in all aspects of foreclosure law and give you the best chance of avoiding foreclosure. Deed in lieu of foreclosure may be an option for you, but it must be submitted and negotiated properly. We have the expertise to work with your lender(s) and resolve your foreclosure issues efficiently; call today for a free consultation.

We are experienced California Foreclosure Attorneys, California  Foreclosure Prevention Attorneys and CA Deed in Lieu of Foreclosure Attorneys. We are a unique and powerful combination and can help you with your real estate legal issues.  We have helped thousands of people with pressing real estate issues find solutions and relief through the use of short sales, CA Deed in Lieu of Foreclosure, strategic foreclosures, mortgage debt settlements and legal real estate review and advice.  

Our real estate attorneys have achieved proven results and can give you the great legal advice and strategy needed to get you the results you want. Contact us today to schedule your complimentary attorney consultation by clicking HERE or by calling 916-999-1376. We look forward to helping you with all of your California Deed in Lieu of Foreclosure real estate needs.