What Is A "deed In Lieu"?
Does anyone have a good explanation for me and how it affects a short sale deal?
Jason
Does anyone have a good explanation for me and how it affects a short sale deal?
Jason
Deed in lieu means a deed in lieu of foreclosure. Rather than having the bank jump through all the hoops of going forward with the foreclosure (filing suit, going to hearing, getting a final judgment, and executing on the judgment a/k/a court sale) in order to get the deed a/k/a certificate of title, the borrower agrees simply to deed the property over to the bank. The end result is the same - - the bank becomes the owner of the property. The bank may or may not foregive the remaining debt when taking deed in lieu.
Once the property is taken back by the bank there is no "short sale" in the traditional sense. The property is now an REO and you are dealing directly with the bank as the owner of it rather than the lender. The prior owner a/k/a the borrower is now out of the picture.
Is this a good enough explanation for u?
Good explanation. Thanks. So I guess it is like the person being foreclosed on gave up and handed the property back to the bank.
As an investor I suppose this is something you want to avoid, because it would normally be better to negotiate a short sale than to try and by an REO, right?
Jason
I'm new so forgive the possible ignorance, but I thought that the deed in lieu of foreclosure also applied to the investor. Hypothetically, couldn't I assume the loan and he could deed the house to me, instead of the bank. It shouldn't matter to the bank if the back payments are made and payments are continually made on time. I thought I read all this in a book once, but maybe not.
The Ghini