Deed in Lieu vs Short Sale
There are two ways in which homeowners often pursue when avoiding a foreclosure proceeding.
(1) A deed in lieu of foreclosure allows you to be relieved from the defaulted loan by giving up the property to the lender. The lender takes ownership of the property in return for satisfying the debts owed.
(2) In a short sale the lender does not take ownership of the property, but you sell the property in efforts to satisfy the debt to the lender. The lender agrees to accept less than the amount of the loan and you are released from their debt.
Which Is Best?
A deed in lieu of foreclosure is the quickest option to erase your debt to a lender. When you sign over the deed to the lender and the lender releases you from responsibility to the loan. However, the lender has the discretion as to which process it approves for use. In a deed in lieu of foreclosure process, the lender is responsible for selling the property in order to obtain their money for the defaulted loan amount. A a deed in lieu of foreclosure often costs the lender more time and money in efforts to sell the home to obtain their payments.
A lender may allow a short sale on a home instead of a deed in lieu of foreclosure for the ease of the transaction. A short sale is a quicker process for the lender and prevents them from taking ownership over a damaged or invaluable property. In a short sale, you are responsible for selling the property and paying the lender the proceeds to repay the debt. A short sale also allows a lender to get rid of the property without the responsibility to taking it through the foreclosure process. A short sale guarantees the lender to recoup the majority of the loan amount, whereas a foreclosure cannot guarantee the lender to recover as much of the loan.
Can’t Decide? Don’t worry, this is a tough decision!
But you don’t have to make it alone! Our attorneys can answer any questions you may have and are here to walk you through the process.