Option #9: Deed in Lieu of Foreclosure
Assuming you don’t owe more for the property than what it’s worth, and you don’t have more than
one loan on it, you usually have the option of calling your lender and offering them the deed, free & clear,
while abandoning the house immediately, so they won’t foreclose on you. Many lenders will accept your proposition
as long as you’ve moved out already and can hand them the Keys immediately. Unfortunately, by the time you’ve
gotten a Notice of Default, your credit report is greatly impacted already. I don’t feel that this solution solves
many problems at all.
At least it won’t get you sued by your lender…
There will still be a few really ugly things on your credit report that can hang around and
tarnish it for up to 7 years. This is the second worse option because it solves very little and many people
have more than one loan. Therefore, you can’t hand the house over to more than one lender. Sure, the first
loan’s bank would take it, but then you’d be sued for breach of contract by the holders of any other loans or
liens on that property.
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