Thinking of giving your house back to the bank (also known as a ‘Deed-in-lieu’) or just walking away from it?

Too often people walk away from a stressful piece of real estate because it’s simply too much. With all of the issues associated with family and home life, the job, the rising cost of living, this issue, that issue…….who needs the drama associated with a house plagued with repair issues, complaining neighbors, sky high taxes and delinquent mortgage payments?  Sometimes it does seem to be easier to just let this aspect of our lives go so we can concentrate on more important issues.

Well not so fast unless you want to add additional headaches onto the ones you already have. Just because you walk away from a home doesn’t mean it walks away from you. Chances are there is some legal and or financial liability associated with the house that you can’t just walk away from.  Nor can you simply call the lender (i.e. bank) and tell them to “come get it”.

If the house is still in your name, you are legally liable if anyone gets hurt at or by the property. In other words, if someone gets hurt while on the property (legally or not) or gets hurt by the property (i.e. it catches fire after a squatter breaks in and damages the neighboring house), you could be sued and held personally liable.  If a court finds you responsible for any damage, a judgment can be filed against you leading to a levy against your home or wage garnishment.

Additionally, town inspectors who are now responding to complaints about squatters breaking into the property, the grass not being cut, the illegal dumping going on at the property or the snow not being shoveled are now levying their own fines and dragging you into court.

But I won’t have to worry about that if I just give the house back to the lender, right?

Well, not exactly. The lender’s process for taking a home is neither quick nor simple. That’s if it exists for your home at all as not all lenders are allowed to take back a property.  Even if the borrower voluntarily wants to give it back.

First, just because you want to give the house back to the lender, doesn’t mean they can take it. If your loan is backed by the government (aka a HUD loan), your lender may legally be required to go through the foreclosure process.  

Second, if your house has a second mortgage, that lender cannot be denied the opportunity of bidding on the property at the foreclosure auction in order to protect its interest. Hence no deed in lieu unless the 2nd mortgage lender agrees.

Finally, even if your lender does agree to a deed in lieu, it can often take months for them to process the paperwork.  You’re still on the hook for all of the liability we mentioned earlier.  All while your credit continues to suffer.

So what are my options besides doing a deed in lieu or walking away?

Option #1 – Sell the house. Before giving the house away, make sure you’re not giving away tens of thousands of dollars. Your house may be worth a lot more than you think. There is a housing crisis currently under way and homes like yours are in short supply. Even if its current ‘As-Is’ condition. The right cash buyer (like us!) will know how you can sell your home quickly, without a bunch of forms and at no cost! No money due at closing and certainly no out of pocket costs.

Option #2 – Perform a Short Sale.  A short sale is when your lender agrees to accept less than amount owed on the mortgage due to the house being ‘under water’. You will need a Realtor or Short Sale expert, such as our team, to make sure this is done correctly.

Option #3 – Just sign the house over to us.  Perhaps you’re really done with the house and thinking ‘how do I get this house out of my name?’  Yet you don’t want to contact the lender and go through a complicated deed in lien process.  But you still don’t want to keep the house in your name and possibly add to more headaches.  Deeding the house over to licensed professionals like us who have decades of experience just might be the answer. We know how to get the house out of your name Fast so at least you don’t have to worry about being sued because someone got hurt on or by your property. Additionally, we will work everything out with your lender so that you can finally put the drama of late mortgage payments behind you.

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