If you facing a foreclosure, you may not realize you have an option called “deed in lieu of foreclosure”. This may prove to be a less stressful and more affordable course of action. The deed in lieu of foreclosure in Florida could be a sound solution to a financial crisis.
Foreclosure is the term used to describe the legal process of recovering a property once payment on a mortgage loan falls behind or stops. When a contract is used in place of the legal process, it is called “in lieu of foreclosure”. Either way there is a transfer of property but the process is different. The deed option may even be better. Using the deed in lieu of foreclosure in Florida is a simple process.
There are several advantages, as listed below, to using the Deed in Lieu of Foreclosure; though it does not protect the credit rating and may affect taxes.
Note: When it comes to future credit, some people have experienced leniency with creditors. Creditors view a Deed in Lieu of Foreclosure less harsh than a standard foreclosure.
Deficiency judgment after a Deed In Lieu Of Foreclosure is the difference between the fair market value of the house and the total debt.
Usually Deed In Lieu Of Foreclosure satisfy the debt. But lenders always seek for new ways to get their money back. Unfortunately the state of Florida dose not have a law that prevents the lender from getting deficiency judgments following a Deed In Lieu.
This means that a lender will probably try to hold the borrower liable for the deficiency in debt.
In order to prevent that from happening, the contract must state that the transfer of the deed is in full satisfaction of the debt. if this provision is not in the agreement, the lender may file a law suit against the borrower, after the transaction have been completed.
Effective July First, 2013 the lender has only one year to try and collect deficiency judgments after accepting a Deed In Lieu Of Foreclosure.
Fannie Mae has a spacial program called “Deed-For-Lease”. Under this program a borrower who is eligible for Deed In Lieu and wants to stay in the property as a tenant after the Deed In Lieu process, can lease it from Fannie Mae for 1 year at fair market price. (This program is available only if Fannie Mae owns the borrower’s mortgage). To learn more about this program visit Fannie Mae’s website!
If you face foreclosure, an options such as a deed-in-lieu in Florida can save time and money. Once you realize this is a quick and minimally stressful process as compared to a standard foreclosure; it might be the “way to go” when relinquishing property due to financial crisis.