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How to Negotiate a Deed in Lieu!

A deed in lieu of foreclosure (DIL) is the voluntary transfer of ownership of your property and your home’s deed to your mortgage lender who then releases you from your mortgage loan and any responsibility for it. A DIL allows a homeowner to avoid foreclosure by allowing the mortgage lender to take possession of the home.


You must demonstrate a financial hardship on your part in order for a lender to accept a DIL. To negotiate, first, approach your lender with sufficient proof of inability to repay your mortgage. Then you must offer a deed in lieu of foreclosure. Secondly, you should negotiate the terms of any reports to credit bureaus your lender may make after it accepts the DIL. Finally, it is important to make sure the lender won’t pursue you for any financial loss it suffers.


If possible, it might be helpful to hire a foreclosure attorney to represent your deed in lieu offer to your mortgage lender. You should build a very comprehensive deed in lieu offer. Go over it thoroughly before you present it to your lender and be prepared to make use of other foreclosure prevention options quickly if your lender does not accept your deed in lieu offer. In extreme cases, the mention of the possibility of bankruptcy could convince your lender to accept a deed in lieu.


Lenders almost never accept deed in lieu offers from homeowners that have second mortgages on their titles, such as vacation home. A lender most likely will refuse your offer of a deed in lieu if your home is worth less than you owe. But, if your lender insists on a foreclosure, you could have from several weeks up to a year before it actually takes place. Even speedy foreclosures take about four to five months to complete.

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