One option to walking away from an under water property may be a deed in lieu of foreclosure. If you are involved in foreclosure litigation and want an option that allows you to walk away from your home without consequence, a deed in lieu of foreclosure might be an option. The lawyers of Christopher M. Sprysenski, P.A. are here to help you explore your foreclosure alternatives, including a deed in lieu.
A deed in lieu of foreclosure involves you deeding your property back to your lender in exchange for a forgiveness of the remaining mortgage debt. The deed in lieu is a legal document that acts to transfer the title to your property to the lender. Most lenders will require that you show some sort of a hardship to be considered for a deed in lieu.
There are several benefits of pursuing a deed in lieu. First, it helps you avoid the expense and credit reporting impacts of a foreclosure. It may also allow you to walk away from a property that is worth less than the remaining balance on your mortgage loan. The lender will often provide you with the original promissory back so that no one else can enforce its terms.
There are other considerations that you must explore concerning a deed in lieu. The primary one is related to deed taxes. As with any transfer of property, you must understand whether you will be responsible for any recording tax associated with the deed in lieu. The other consideration is related to your lender’s forgiveness of the remaining mortgage debt. You may be responsible for paying tax on the forgiveness of the debt. There are some federal laws that might allow you to avoid this tax, especially if the property you are deeding is your primary residence.
While a deed in lieu will still appear on your credit report for seven years, a foreclosure attorney may be able to assist you with preparing accompanying documents that would allow the debt to show as settled for less than amount owed. This reporting status takes much less time to improve your credit.
An attorney at Christopher M. Sprysenski, P.A. can assist you in determining whether a deed in lieu is an option for you. Our lawyers represent clients in foreclosure, providing them the time necessary to pursue a deed in lieu with their lender. Contact us today at 407-630-8485 for a consultation.