Question about Deed in lieu

[sickandtired]

I posted this on the Chap 7 board, but posting it here too.

So we filed last week and our meeting is next month. Today we get a letter from BoA offering to do deed in lieu and that if we qualify they will give us a fee for relocating. Can this be done after we've already filed? Has anyone had experience with this with BoA? What exactly happens here?

[AbbeyA]

I am new to this board, so the experts need to correct me if I am wrong ... I did call our mortgage co. about deed in lieu. What they explained to me is that I give them the deed in lieu and we move out rather quickly after that. There isn't a "foreclosure" reported on your credit report, but the deed in lieu will be there.(Apparently the foreclosure has a more negative effect on credit score than deed in lieu, but deed in lieu is still negative) Basically, it sounded to me like a much less expensive way for the mortgage co. to take the house back.

If you stay in your house and wait for them to foreclose, you may be in there for quite a while, while saving the monthly mortgage money. If you do the deed in lieu, you will be out quickly and paying rent right away wherever you end up.

Your credit score is already going to be negatively affected by the bk, you might as well ride out the time in the house "rent free" and sock away the money.

Also, I was told that you cannot offer a deed in lieu if you have any liens on your home.

[HHM]

Yes, you can do this after filing.

AbbeyA correctly points out the pros and cons, but a DIL is NOT better on your Credit Report than a foreclosure, it is simply that it happens sooner so you start the clock running sooner with a DIL then waiting for a foreclosure. But the "inside" lending guidelines used by mortgage lenders, DIL and foreclosure are EQUALLY negative.

[ryan]

I posted this on the Chap 7 board, but posting it here too.

So we filed last week and our meeting is next month. Today we get a letter from BoA offering to do deed in lieu and that if we qualify they will give us a fee for relocating. Can this be done after we've already filed? Has anyone had experience with this with BoA? What exactly happens here?

Got what was probably the same letter from BOfA awhile back..I looked into it with them and online as well. After consideration, I saw no advantage except the possible 'cash for keys' provision, which could not have offset the benefits of staying longer. I guess it depends on you.

[ssmdem]

If they would do a deed in lieu -- your name still stays on the title until they actually sell the house though, right? I'm really looking for the quickest way to get our name off this lien so our time clock can start ticking for when we can actually buy another more affordable house instead of renting.

[HHM]

If they would do a deed in lieu -- your name still stays on the title until they actually sell the house though, right? I'm really looking for the quickest way to get our name off this lien so our time clock can start ticking for when we can actually buy another more affordable house instead of renting.

No it doesn't. By giving the bank the DIL, you are signing the property over to the bank, so the house goes out of your name when the DIL is recorded with the county.

[ssmdem]

No it doesn't. By giving the bank the DIL, you are signing the property over to the bank, so the house goes out of your name when the DIL is recorded with the county.

[HHM]

That answer really depends on the servicer. Usually they won't entertain any sort of changed ownership (short sale, DIL, etc) until you are about 3 months behind on payments. But again, it really just depends on the servicer's internal policy.

[ssmdem]

That answer really depends on the servicer. Usually they won't entertain any sort of changed ownership (short sale, DIL, etc) until you are about 3 months behind on payments. But again, it really just depends on the servicer's internal policy.

I guess what I really meant was is there a point where it's too late? I would guess we should obviously try for the modification first. Short sales really aren't much an option around here - as NOTHING is selling, even houses that are priced dirt cheap. Guess after we get a response on the modification? By that point, we would probably have already filed for bankruptcy, but guessing the process still stays the same, huh?

[HHM]

It depends, in general, I would say that once foreclosure has started (i.e. that a sale date has been scheduled), then a DIL is probably dead in the water since the bank will have already incurred the expense to foreclose. Unless your house is in a desirable area or something, my speculation is that once foreclosure starts, DIL is about a 1 in 20 chance.