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Landlord Guide Friendly Foreclosure
Friendly foreclosure, also known as a deed-in-lieu of foreclosure takes place when a landlord or real estate owner voluntarily gives the foreclosing lender or its servicing agent a deed to the home. This transaction may include, but does not necessarily require, moving out of your home. A deed-in- lieu provides the lender ownership without the delay and expense of a foreclosure sale.
Landlords or Real Estate Owners may benefit from this alternative as a deed-in-lieu transaction may carry less credit stigma than a foreclosure or a “short sale”, and the lender or its servicing agent may respond to a proactive homeowner with a cash payment to assist in relocating. The impact upon your credit rating of a “short sale” may not be entirely clear. Some lenders or their servicing agents have elected not to report “short sales”.
Certain lenders or their servicing agents will not accept a deed-in-lieu because of the possibility of other liens or claims on your home (that may be eliminated from the title of your home by a foreclosure sale). A foreclosure sale typically creates a “clean” title while a deed-in-lieu may not. However, lenders or their servicing agents frequently rely on title company records and title insurance coverage to protect against other liens or claims. With title insurance coverage, lenders or their servicing agents will generally agree to accept a deed-in-lieu.
If you go through with a deed-in-lieu, the lender owns your home and, just as with a typical sale, a “short sale”, or a foreclosure sale, you may be required to move out of your home unless a tenant relationship is arranged with the lender or its servicing agent.
This is a blog post for Real Estate Professionals, Investors, Landlord, Property Manager, and Property Management Companies. Landlords and Real Estate Owners Guide To Friendly Foreclosure is brought to you by SimplifyEm Pay Rent Online and Property Management SoftwareYou might also want to read:
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