A deed in lieu of foreclosure allows a borrower to essentially give back the house to the lender in exchange for complete forgiveness of the mortgage debt. This is a very appealing option for those homeowners who are severely underwater on their mortgages. Until recently, lenders were reluctant to allow deeds in lieu unless the borrower could show some extreme financial hardship as well as show that a good faith attempt was made to try to sell the property as a short sale. Now, however, lenders are much more willing to accept such deeds in lieu as it provides a quicker and less expensive way for them to regain ownership of the property when compared to foreclosure. In fact, Bank of America is now targeting its customers who are behind on their mortgages and offering them this option. They are even offering up to $15,000 to customers to accept this option and surrender the keys to the property. From the Bank’s standpoint, this allows the opportunity to try to resell the property while interest rates are low and buyers can afford higher prices.
So if you or someone you know has been unsuccessful in your attempt to sell your home by a short sale, you may want to consider this option, especially now with the change in lenders policy on these requests.
For those who are not underwater on their mortgage but have been unable to sell, revisit your asking price now. If Bank of America is willing to make such concessions with their present customers in order to be able to resell their inventory while rates low rates make mortgages affordable for many of the remaining buyers who remain unscathed by the market downturn, shouldn’t you be considering making a concession as well?