Can some explain the deed in lieu of forclosure

[kl030505]

vs, forclosure vs. surrendering in a bk?

Why are lenders so hesitant to accept a dead in lieu of forclosure? What makes them decide to do that?

We want to file in about 3 weeks time. We plan to surrender the house. but we want to be able to live here until December 31st. Can we do a deed in lieu of forclosure if we plan to stay on a little past our discharge date?

If we file before the forclosure process begins, is that somehow better than waiting till they start the process then filing and having the automatic stay put on?

Sorry, I'm so nervous about this whole process. My worst nightmare is coming home and being locked out of our home We don't have any valuables, but it's still my stuff, you know?

I'm happy to be doing the bk and surrendering the house. It was a hard decision, but it's the right one, no matter how humiliating. I just can't wait for it all to be OVER and for us to move on, but it's a scary process when you are in the midst of it.

[poorme]

Are you behind in payments now? If not, then offerring the bank a DIL will raise their suspicions - that's not the type of 'normal' daily requests they get.

Advising them in advance that you're planning to file could work against you, in that they may decide to accelerate their loan and put you in default before you file - helping them foreclose faster. I wouldn't suggest it. Accepting a DIL willingly is like admitting to their shareholders they made a mistake by loaning you - whereas following the typical default declaration and f/c puts YOU as the culprit and justifies their actions and expenses.

However, if you can get them to take the DIL (they don't have to) can help them lower their costs, and it could keep the f/c from appearing on your credit - but so can a short sale. Do you have any equity that will be snagged in the bk estate?

And, what state/region of the country you live in can make a difference, as state laws vary. Best to consult a bk attorney for more details.

[kl030505]

We have a bk attorney. We are definitely surrendering the house I just wasn't really sure what the deed in lieu thing meant, etc. We live in MA, I'm currently 2 months behind on payments, have NOT told them we are filing. I expect them to accelerate the loan next month, but we will file by then.

We have no equity, it will definitely be a no asset case. The house has negative equity and in the current market we couldn't possibly sell for what we owe and I'm really not interested in a short sale because of the tax implications, not to mention my mortgage lender won't guarantee that they approve of a short sale until they are at the closing table and that's a risk I'm just not willing to take. I'm willing to deal with the aftermath of surrendering the house as part of the bk, as soon as we declare and have everything wiped clean and move to a rental that isn't a freaking money pit, we will not only be in the black, we will actually be able to start a rainy day/emergency fund as well.

[HHM]

If you are going to file BK...you might as well live in the house essentially rent free. If the foreclosure happens within the BK (i.e. you surreder your house as part of the BK), future lenders view that as 1 negative event, so it really doesn't matter. If you do a DIL, you have to move out as soon as you sign the deed. With a BK and Foreclosure, you can live in the house probably for the next 4-8 months without having to make a payment.

[RickInMich]

HHM, I have a question. What if during the filing you state you are keeping the house, but then decide during the BK process to let it go? Would future creditors still see it as one situation? In other words, keeping the house so that there's not all that extra money that could possibly make us go from Ch. 7 to Ch. 13. Ultimately, how far fromt he filing could one decide to give up their house and still have creditors look at it as one event?

Rick

[HHM]

The statement of intention is meaningless...it is whether you make payments or not.

If you know you can't keep the house, you would be a fool to keep making payments.

[twuoo]

Does anybody know the nuts and bolts details for DIL in Michigan?

I get scattered info, like the house is supposed to be abandoned, but listed currently at market value. The problem with that is what if the house sells. The market value is way less than the mortgage. So sounds like you get scrwed either way?

What other things are you supposed or not supposed to do?

I read on the HUD website you cannot "walk away" from a home, but I'm not sure if that applies across the board.

So any info would be appreciated.