Pending Foreclosure - Banks wants Deed in Lieu w/possibility to rent back- What to do

[clamp]

My bankruptcy was discharged in Feb '10... I did NOT reaffirm either my first or second (held by different banks). They offered me a modification, but I will not do it because I am completely upside down in the house. Foreclosure sale is scheduled for Dec. 20. I had just planned on letting them foreclose and getting out. No biggie since the foreclosure is against the house and not ME and can't be reported on my credit since the loans were discharged. Today, I got a letter from the bank asking if I would like to talk to them about doing a Deed-in-Lieu or Short-Sale (I don't see the point of a short sale at this point)... also offering up to $3,000 in cash for moving and other expenses and even offering to possibly then lease the property back to me after DIL for below-market rental for up to 6 mos. with possibility of extending lease for addl 12 month at market rate.

QUESTIONS: Since i did not reaffirm the loans, I know a foreclosure can not be reported against me and will not affect my credit any further... but what about a DIL? I remember reading somewhere (can't seem to find it again) that if you chose to do a DIL, to make sure that it is agreed in writing that the DIL will not be reported to credit agencies... instead that it will simply be reported as 'paid in full' or 'payment satisfied' (something like that)...

I don't even know if a DIL is possible since I have a second with a different bank... but I would think that BAC would be aware of that.

Would like thoughts on this and/or advice.

[researchnerd]

They are trying to cut their losses. If you do a DIL instead of foreclosure, they will save thousands in legal fees, and if you rent back from them, they won't need to be in a hurry to sell the house. Be clear: This is about making life easier for THEM, not YOU.

That said, there's no reason you can't benefit from this, especially if you want to stay in the home. But it will be essential to proceed with caution. Go over every document with a fine-toothed comb (and a real estate attorney, preferably) to be sure there isn't some clause shrouded in legalese reaffirming your debt. Whatever you choose to do, it should be reported as IIB and $0. Be sure that everything you want is clearly documented and written so there is no room for ambiguity.

[tobee43]

My bankruptcy was discharged in Feb '10... I did NOT reaffirm either my first or second (held by different banks). They offered me a modification, but I will not do it because I am completely upside down in the house. Foreclosure sale is scheduled for Dec. 20. I had just planned on letting them foreclose and getting out. No biggie since the foreclosure is against the house and not ME and can't be reported on my credit since the loans were discharged. Today, I got a letter from the bank asking if I would like to talk to them about doing a Deed-in-Lieu or Short-Sale (I don't see the point of a short sale at this point)... also offering up to $3,000 in cash for moving and other expenses and even offering to possibly then lease the property back to me after DIL for below-market rental for up to 6 mos. with possibility of extending lease for addl 12 month at market rate.

QUESTIONS: Since i did not reaffirm the loans, I know a foreclosure can not be reported against me and will not affect my credit any further... but what about a DIL? I remember reading somewhere (can't seem to find it again) that if you chose to do a DIL, to make sure that it is agreed in writing that the DIL will not be reported to credit agencies... instead that it will simply be reported as 'paid in full' or 'payment satisfied' (something like that)...

I don't even know if a DIL is possible since I have a second with a different bank... but I would think that BAC would be aware of that.

Would like thoughts on this and/or advice.

i would sign it and RUN!!!!!!!!! wish our bank would do it.....it's been 2.7 years and they will not foreclose...now at least your names will be off the deed...

congrats!! (please make certain you have atty review the deed...whether it's a warranty deed, or quit claim..etc.) before signing and returning...also send it back certified mail.

best of luck and I'M SO JEALOUS!!!

[debbie42]

What my bank did (the one holding the first mortgage) is have us sign some legal document, the name escapes me now, that allowed the first bank to talk to the 2nd mortgage holder about releasing the 2nd mortgage. Now that it has been released, the first mort. bank can do the deed in lieu, which I am happy about and they made a point of saying they will not report it before I could even ask.