Tag: deed in lieu

Alternatives To Foreclosure Exposed!

Posted on by Jenny Zamora

Foreclosure can be a devastating situation for homeowners as well as the surrounding neighborhood. Despite an improving economy in the Orlando, Florida area, it is important that distressed homeowners are fully aware of all the alternatives to foreclosure that are available to them. As a certified distressed property expert [CDPE], I try to ensure that homeowners in foreclosure have the latest most up-to-date information available so that they can make the most informed decision possible based on their situation.


Although lenders have the ability to start foreclosure proceedings after one payment is missed they will usually allow a homeowner to miss up to three mortgage payments before officially starting the foreclosure process. A short sale can substantially minimize the damage to someone’s future loan eligibility, credit rating, security clearance, and even employment with some companies.

It’s important to know that a foreclosure can stay on someone’s record for up to seven long years. Now more than ever, distressed homeowners should take every precaution available to them to try and protect their credit.

A short sale is the most popular way to avoid foreclosure and save your credit. However, there are several other alternatives available to homeowners wanting to keep their houses.

1- Deed in lieu- Basically a voluntary foreclosure where the homeowner signs the property over to the lender instead of going through the foreclosure process. However, you should be aware that a “deed in lieu” will still show up as a foreclosure on your credit report.

2- Loan modification- This is when a lender adjusts the terms of a loan making it more affordable to the homeowner so that they can remain in their home. Loan modifications can be tricky and many times even though the payment is reduced, the principal remains the same or even more. The best loan modification scenario is when the lender reduces both the principal amount of the loan as well as the interest.

3- Bankruptcy- Usually, a chapter 13 bankruptcy is the best way to save your house from foreclosure. It allows the homeowner to make up missed mortgage payments through a repayment plan and get back on track. A chapter 7 bankruptcy, while providing some temporary relief from foreclosure, usually won’t prevent the foreclosure of a home. The bad news is that having a bankruptcy on your record is just as bad as having a foreclosure.

Consult with a Certified Distressed Property Expert

A realtor with a CDPE designation has the knowledge and the tools to efficiently and ethically pursue alternatives to foreclosure, especially short sales. In addition to specialized training in dealing with distressed properties, CDPE agents are connected to an entire network of other professionals in this niche which allows them to remain up-to-date on the complex and ever-changing Orlando real estate market.

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Alternatives To Short Sale

Posted on by Jenny Zamora

Alternatives To Short Sale Video

 

If your lender doesn’t agree to a short sale on your house, there are several other options available to you.
One option would be a “deed in lieu “, which is basically a voluntary foreclosure and all that happens is that you sign the property back over to the bank without going through the whole legal process involved with a foreclosure. You should be aware however that a deed in lieu will show up on your credit as a foreclosure.

 

Another option available to you, if you’re interested in trying to keep your house is a loan modification.  A loan modification is when we try and get the terms of your loan adjusted so that you can afford to keep your home. We do this by either getting your payment reduced or reducing the principal balance or both.

 

Bankruptcy is also an option to avoid foreclosure. There are 2 different types of bankruptcies, a chapter 7 and chapter 13. In this case you would need to talk to a Bankruptcy attorney, and most of them will give you a free consultation on the initial visit.

What if you just let your house go to foreclosure?

 

I would highly recommend that you don’t take this approach because you are just giving up, and when you give up then you’re giving up all control of your situation to the bank and then they can do what they want at that point.

 

Also, don’t think that just because you let it go to foreclosure, that you will be free of that debt. Actually the opposite will probably happen and the bank will hit you with a deficiency judgment for the difference between what you owe and what the property sold for at the auction.

 

So please if you find yourself in this situation, consult with a licensed real estate professional figure out what your best option is and take action.

 

Feel free to call us at 407-902-7750 or visit us at https://orlandorealtyconsultants.com/short-sales/

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Orlando short sale vs. Deed in Lieu

Posted on by Jenny Zamora

 

A deed in lieu/ foreclosure with a smile

By now just about everyone living in Orlando has heard of terms such as “short sale” , “deed in lieu”, loan modification, etc. It’s important to know exactly what the difference is between these terms are and what the implications are. For  example; many  homeowners believe that a deed in lieu is  the same as doing a short sale.  This couldn’t be further than the truth. A deed in lieu is simply put is a foreclosure with a smile on it’s face or a “voluntary foreclosure”.

An overlooked downside to a deed in lieu of foreclosure is the possible forgiveness of the deficiency balance. Under federal law, a creditor is required to file a 1099C whenever it forgives a loan balance greater than $600. This may create a tax liability for the former property owner because it is considered “income.” However, the Mortgage Forgiveness Debt Relief Act of 2007 provides tax relief for some loans forgiven in 2007 through 2012.

The key issue in a deed in lieu of foreclosure is whether the lender is willing to forgive the deficiency balance. Make sure to read the contract carefully to see how the deficiency balance issue is handled. If the document is unclear, take it to an experienced Orlando real estate attorney with experience in property law. An attorney’s time is not cheap, but will be a bargain compared to signing an agreement you do not understand and are surprised later to realize its implications.

 

Consider Doing an Orlando Short Sale Instead of a deed in lieu

I’ve had a countless number of Orlando homeowners over the years come into my office asking me to explain the difference between a deed in lieu and a short sale. By doing an Orlando short sale the lender agrees to accept less than the balance owed on the mortgage at sale. The deficiency balance may be forgiven and you also may qualify for a “Cash for Keys” program which means that by doing a short sale, your lender may give you a cash incentive [between 3- 30 thousand dollars] . On the other hand a deed in lieu of foreclosure is basically a voluntary foreclosure n which you sign the deed over to the lender and walk away. However, a foreclosure, unlike a deed in lieu of foreclosure, the ownership of the property is not transferred to the mortgage holder, and remains with the owner.

The lesson here is if you are considering either a deed in lieu of foreclosure or a short sale you must review the terms and conditions carefully and make certain you understand whether the deficiency balance is forgiven. This is why it’s absolutely crucial to consult with an Orlando Real Estate expertwhen making such an important decision.

Lenders prefer short sales over taking a property to foreclosure because they don’t want to own distressed properties. They would much rather see the owner sell the property and lose the deficiency balance than be forced to take the property through foreclosure, as foreclosure is a costly and time-consuming process.

Another reason to consider a Orlando short sale over a foreclosure is that Foreclosure auctions tend to bring significantly less money than a normal sale would bring. If the sale brings less than the amount owed on the loan, the remaining balance of the loan is called a deficiency balance. This means that you could end up with a deficiency judgment against you for the balance.

If you still have questions about Orlando short sales, come see us for a free consultation. We’ve been specializing in Florida short sales and our team of Certified Distressed Property Experts are up  to date on the latest laws and regulations when it comes to Orlando real estate ensuring that our clients get the best options available to them.

 

Jenny Zamora, Lic.  RE  Broker, CDPE

 

 

 

Orlando short sale expert

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