How Homeowners Can End Mortgage Obligations with a Deed in Lieu of Foreclosure

Georgia bankruptcy lawyers help borrowers get out from under crushing debt

If you face foreclosure on your home or other real estate and lack the financial resources to meet even a modified mortgage obligation, that doesn’t necessarily mean filing for bankruptcy is your only option. A deed in lieu of foreclosure (“deed in lieu” for short) may solve your mortgage debt problem with a minimal impact on your creditworthiness. At Jeff Field & Associates, you can seek the services of a qualified Georgia lawyer to prevent foreclosure and work to cancel out your mortgage debt.

What is a deed in lieu of foreclosure?

A deed in lieu is a means of non-bankruptcy debt relief by which a borrower voluntarily transfers the mortgaged property’s title to the bank in return for the bank releasing the mortgage lien. This prevents or stops any foreclosure action. As part of a negotiated deed in lieu, the bank generally— though not always — forgives the balance of the loan.

Will I still owe money on the mortgage after a deed in lieu of foreclosure?

When a bank accepts a deed in lieu, it usually waives the right to seek a deficiency judgment against you for the difference between the unpaid debt and the fair market value of the property. (If the property is worth more than the balance due, there is no deficiency.) However, even if the bank refuses to eliminate your remaining debt, that debt is dischargeable if you later file for bankruptcy. In Georgia, you can use the bankruptcy exemption that applies to your home to protect other property from liquidation.

What are the benefits to a deed in lieu of foreclosure?

Although you are handing over the property, a deed in lieu offers important advantages. One is that it does not result in a court judgment that can do severe damage to your credit rating. Another benefit is that you may be able to get a Fannie Mae loan one to three years earlier than if the bank forecloses. We can explain the deed in lieu of foreclosure and its benefits to you in more detail and, if you decide it is right for you, help you get one.

Why would a lender want this?

A bank that accepts a deed in lieu acquires the property without the delays and legal fees involved in seeking foreclosure. The bank also benefits from the property being kept in good condition — rather than lying vacant and deteriorating — which means the bank can fetch a better purchase price when the property eventually goes on the market. On the downside, the bank must forgo realizing the full value of its loan. In addition, guarantees on some federally backed mortgage loans are triggered only if the property goes into foreclosure.

What are the requirements to secure a deed in lieu of foreclosure?

Not every homeowner facing foreclosure can obtain a deed in lieu. The bank may not come to terms if there is another lien on the property in favor of a different creditor or if you don’t have clear title. Another reason for rejection of a deed in lieu is that the property is poor condition or has significantly dropped in value. We can negotiate on your behalf to help you meet the bank’s requirements and we will represent you throughout the process.

Contact an experienced Georgia attorney for help in preventing foreclosure

Jeff Field & Associates helps Georgians deal with overwhelming mortgage debt through deeds in lieu of foreclosure. To schedule a debt relief consultation, call 404-381-1278 or contact us online. We have offices in Scottdale, Gainesville, Marietta, Lawrenceville, Douglasville and Athens.