Question: I gave my home (wyoming) “deed in lieu” back to the bank in may of 2011 and they have done nothing with it… there is water and mold damage to the home now. home worth approx 185000,loan 200000 principle,approx 40000 in damages. the city has been doing on the home since jan 2011 and have been told they will turn me over to collections if i don’t pay?? i am curious if there is a chance the bank just walks away from it and if so am i still responsible for upkeep? thanks
deed in lieu foreclosure
Question: I have a home in Florida with sever construction defects.
The house cannot be sold and does not have any real value (actually a negative value).
We have received a rather insufficient insurance settlement from the contractors’ policy.
Since the settlement was not enough to cover the existing mortgage and provide provide a new place to live we are planning to use that money to set up a new primary residence in Arizona Can we then offer a Deed in Lieu Foreclosure? Can they take our Arizona home.
PS: There is no record with the county or is there anything from the insurance company defining how we use the money.
Answer: -First lets address the whole insurance thing. As with any insurance policy or insurance claim, it’s there to be used to fix or rebuild whatever was insured. So that’ s up to you how you want to handle that. In terms of offering your lender a deed in lieu of foreclosure is definitely a possibility as long as there are no other liens or mortgages on the property. As for your Arizona home, if you didn’t pledge it as collateral for the Florida home, then no…they can’t take it. The worst they can do is sue you and file a judgment against you for the amount they lost. Very rarely happens, but it can happen.
Question: We don’t know what to do, we have 2 houses in Arizona, 1st house we took out a loan of $60k (leaving us a loan amount of $220k) and used those $60k to build our 2nd home which is now our primary residence we have been living in it for 1yr 4months and we were renting out the 1st house to help us pay the loan, but now we have been unable to get renters in and my husband got fired from work and has been unable to find a job, this month will be our first month not be able to make the mortgage payment, I called the bank and they told me that they were unable to modify our loan since we have 2 houses and 1 is not owner occupied. I spoke to anther department and asked them about a deed in lieu foreclosure, all they told me was that the house would need to be in short sale for 90 days before they could talk to me about that. So my question is if the house sell in short sale or if I give the house back to the bank deed in lieu foreclosure can they come after our primary residence to collect money and if they will can I change the deed of trust to owner primary home (which is free and clear of any loans) before the bank tries to get involved to someone elses name so the bank wont take away our primary residence away? Thank you.
Answer: -This is a very common question…can the bank come after my other assets if I do a short sale, deed in lieu foreclosure or it just goes to auction. The answer is “NO”. When you signed the paperwork with the bank it specifically states that the home would be sufficient collateral for the loan. The only way they could come after other assets is if you pledged them as additional collateral in order to get the loan. So you don’t have anything to worry about. What you do have to worry about is a deficiency judgment where the lender can sue you for the difference that was not collected. Although this procedure is not common at all, it does happen once in a while and is more common in mortgage states. It does not happen very often because homeowners will just file bankruptcy and wipe it out altogether, which means the bank loses even more money. So more often they will issue the homeowner a 1099 for the amount they lost, which could be a significant amount. That is why a short sale is a better alternative because it’s less damaging on your credit, you can eliminate the deficiency judgment altogether if done properly, and in many cases you don’t have to pay as much when they 1099 you.
Question: In Arizona I have come across lenders who talk homeowners into short selling their home vs. signing a deed in lieu. Why wouldn’t they want the deed in lieu? What’s in it for them if the homeowner does a short sale?
Answer: – With a short sale, the home gets sold even though they may take a larger loss upfront. With a deed in lieu, they take back the property, which looks bad on the books and now they have to find a buyer. In a market like this, they would much rather take a for sure sale and not have to worry about selling it some time in the future.