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A Deed in Lieu of Foreclosure

 

As a respected foreclosure lawyer in the Chicago area, Ahmad Sulaiman of Sulaiman Law and Associates has met with dozens of clients who are facing foreclosure. And many of them are more focused on ending the situation than searching for the options that are best for them. In order to protect your future, however, Sulaiman says you may want to consider a deed in lieu of foreclosure, which is another way to extinguish the rights you have to your home in order to settle the debt you owe to lenders.

 

In the past few years, Sulaiman has approached the financial struggles of his clients with various methods that he believes worked best for their particular situations. Here, he tells us one of those options: A deed in lieu of foreclosure.

 

Another Option

Much like a short sale, or other forms of loss mitigation, a deed in lieu of foreclosure is another option to extinguish the rights you have to your home in order to settle the debt you owe to lenders. By accepting the deed in lieu of foreclosure, the bank will, in most cases, free you from liability on the loan, also known as a deficiency.

 

Beneficial to Both Parties

Agreeing to a deed in lieu of foreclosure can be beneficial to both the lender and the homeowner. Basically, the homeowner is extinguishing his rights to the home before the foreclosure process begins, before any litigation takes place, and before any judgment. By doing so, his credit will not be as poorly affected as it would have been from foreclosure, and he doesn’t have to go public with the fact that he’s losing his home. From the lender’s standpoint, this option is favorable because either way, the lender will gain possession of the home and avoid the costly foreclosure proceedings.

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When to Present This Option

In my experience, you want to extinguish any liability you have as soon as possible. So, once you can no longer make payments on your home or there is no conceivable way for you to settle your debts, your foreclosure attorney should approach your lender with this option. Typically, it will be the homeowner who comes forth with proposing a deed in lieu of foreclosure because, legally, both parties must enter into this process voluntarily. And, if the lender is the one who first makes the proposition, he fears his intention could be misconstrued.

 

How to Secure the Process

To make the process successful, you or your attorney must persuade the lender through negotiations that it is in his best interest to allow a deed in lieu of foreclosure to take place. Typically, if a lender agrees to go forth with a deed in lieu of foreclosure, he will lose roughly $20,000 to $70,000 from the profit of the original loan.

 

Possible Setbacks

The process of securing a deed in lieu of foreclosure can be quite tricky if you acquired your home with the help of a secondary lender. Because of the loss of money that the primary lender takes, he may be unwilling to split the money with any other lenders who supplied smaller amounts of money to you. As a result, you are stuck with other lenders who still have their hands reaching out for money.

 

Before you can proceed with the process, you or your attorney must settle with any other lenders who have an investment on your home. Sometimes, this could jeopardize the ability for the process to move forward, and you may end up in foreclosure regardless.

 

Why to Hire an Experienced Lawyer

It’s a good idea to seek representation from an excellent lawyer in your area before negotiating with lenders. Because of all the ins and outs of real estate law, including the high quantity of the money owed and the possibility of multiple lenders, you need an experienced attorney who has represented clients in situations like yours before.

 

Any reputable attorney should comb through your files meticulously to look for any setbacks or errors made in your loan, and to assess which option is best for you. As with most forms of loss mitigation, if you are considering a deed in lieu of foreclosure, then you will want to act as quickly as possible.

 

This article is for informational purposes only.  You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel.  Neither publication of this article nor your receipt of this article create an attorney-client relationship.

 

Ahmad Sulaiman is a writer for Yodle, a business directory and online advertising company. Find a<a rel=”nofollow” onclick=”javascript:_gaq.push(['_trackPageview', '/outgoing/article_exit_link/2762480']);” href=”<a rel=”nofollow” onclick=”javascript:_gaq.push(['_trackPageview', '/outgoing/article_exit_link/2762480']);” href=”http://local.yodle.com/articles”>http://local.yodle.com/articles”>lawyer</a> or more <a rel=”nofollow” onclick=”javascript:_gaq.push(['_trackPageview', '/outgoing/article_exit_link/2762480']);” href=” http://local.yodle.com/articles/topics/legal-services/”>lawyers</a> articles at Yodle Consumer Guide.

 

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