- 1). Consult a lawyer about possible ramifications of the deed in lieu of foreclosure in your state of residence. Real estate laws vary by state. A real estate lawyer is your best source of up-to-date information on the possible tax and other implications of the deed in lieu process where you live.
- 2). Gather your supporting documentation. A deed in lieu needs to be buttressed with proof that you can no longer afford your house payments.
- 3). Get a written agreement from the mortgage holder that he will not sue you for any deficiency. Before you start the deed in lieu process, you'll need to be sure the holder of the mortgage will not take legal action against you if any amount of the mortgage remains due after the house is sold. Fortunately, in certain states, no legal action is allowed. On the other hand, many banks will not agree to a deed in lieu of foreclosure if the amount of the remaining mortgage exceeds the current market value of the home.
- 4). Send a deed in lieu offer letter to the bank or mortgage company that states the offer is being made voluntarily. Draft this document with the help of your real estate attorney. Many banks will not execute a deed in lieu unless the home owner expressly states he is acting of his own will and not in response to pressure from the lender.
- 5). Review the deed in lieu of foreclosure agreement. Your mortgage holder will develop this document. Have your attorney review it and, if need be, negotiate any changes.
- 6). Sign the agreement. Once the deed in lieu is executed, the mortgage company will record it with the county recorder's office.
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