A deed in lieu is basically a voluntary foreclosure of your property. Instead of going through the lengthy and costly process of foreclosure, you as the owner can opt to hand over the property to your lender. This is a good decision if you know that you are incapable of paying your mortgages in the future.
There are several advantages to a deed in lieu, both to the lender and the borrower. For one, both can avoid the cost, inconvenience, and lengthy process of foreclosure. At the moment, most foreclosures take about one to three years to finish. The publicity that comes with it can also bring embarrassment that both parties would rather avoid. For the lender, a deed in lieu instantly makes him the owner of the property. Once the title has been transferred, he can very well do whatever he wants with the property, which can include selling it for a higher price. For the borrower, a deed of lieu can fully free him from all his obligations, except when there are conditions made contrary to this during the negotiation stage.
Any homeowner can actually go through the process of negotiating a deed in lieu by himself. However, it would be better if you as the borrower and current owner of the home seek legal assistance from a Long Island foreclosure lawyer. Your lawyer can first give you other options that can help you keep your home. Some borrowers think that since they can no longer afford the monthly mortgage, it instantly means that their only option is to surrender the property.
Your Long Island foreclosure lawyer can still try to bargain a loan modification or a refinancing for you, even if just for a temporary period until you can improve your finances. However, if these options are bleak and your lender is not willing to negotiate in that direction, then a deed in lieu might be your only option.
As mentioned, a deed in lieu is a voluntary foreclosure. Hence, it must be initiated by you or by your Long Island foreclosure lawyer in your behalf. He can call up the lender and offer this option. Once the lender approves, your lawyer will proceed to prepare the forms necessary for the deed in lieu and he has to create a letter explaining your financial problems, which has caused your inability to pay the balance of the loan. Your lender will have to be convinced that you truly are experiencing a financial hardship and not simply giving up the property that you no longer want.
Having the services of a Long Island foreclosure lawyer will give you several benefits. First, he understands the law better, so he knows your rights and will be able to protect them. Second, he can scrutinize the deed in lieu contract to ensure that it clearly frees you from any debt. There are circumstances where the borrower has to pay off the deficiency between the balance of the loan and the equity of the property, but this should only happen if the borrower agrees to this condition from the start. If the deal was to fully erase the debt, then your lawyer can ensure that the contract states just that to avoid future problems or lawsuits.
Third, your lawyer can follow through with the lender to make them report the settlement of your debt to the credit bureaus to prevent affecting your credit score. Finally, your lawyer can even apply a tax relief on your behalf so that the turn over of the property to the lender will not be deemed as taxable income.
All in all, a Long Island foreclosure lawyer will be your ally and assistant in going through a deed in lieu agreement that frees you from any liability. Doing it on your own, although possible, can make you prone to making mistakes that can eventually haunt your finances in the future.