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-   -   Deeding your home back to the bank (https://www.askmehelpdesk.com/showthread.php?t=32575)

  • Aug 25, 2006, 12:33 PM
    djk1600
    Deeding your home back to the bank
    If a senior citizen is forced to deed his/her house back to the bank, will that affect the senior citizen's credit rating?
  • Aug 25, 2006, 01:09 PM
    ScottGem
    The only way this would happen is if the mortgage was past due. So the lone would be considered defaulted.
  • Aug 25, 2006, 01:22 PM
    djk1600
    So if my mother is current on her payments, goes to the bank and tells them she cannot afford the payments anymore due to the death of my step-dad, she deeds the mortgage back to the bank, she can walk away from the house, free and clear, and go rent a little affordable apartment for herself?
  • Aug 25, 2006, 01:35 PM
    Cvillecpm
    First - it is called a deed in lieu of foreclosure so the foreclosure process needs to have been started; and

    Second - the bank has to accept the deed.

    Yes, owner's credit will be effected.
  • Aug 25, 2006, 02:04 PM
    Dr D
    First check the value of the property to see if it could be sold, giving your mom some cash proceeds. If the property is worth less than is owed on the loan, the bank might consider a "short sale", where it will settle for less than the full debt. I am familiar with "deed in lieu of foreclosure", in which the lender agrees to take back the property, and thereby save the added cost and time for a judicial foreclosure (on a realty mortgage) or trustee sale (where the note is secured by a deed of trust). The lender is under no obligation to accept a "deed in lieu". Also I believe that one of the requirements for a "deed in lieu" is that the loan must be in default. A "deed in lieu" will have the same adverse affect on a person's credit as a foreclosure. I think that you and your mom need to consult a good real estate attorney if you wish to pursue this course of action. There are too many factors involved to do this on a wing and a prayer. Good luck.
  • Aug 25, 2006, 02:13 PM
    djk1600
    We already discovered through a realestate assessment that the house would probably not sale for profit because of the high mortgage, closing costs, pending assessments, and the way the market has flipped. She is not delinquent on her payments but will be forced to be if we cannot resolve this soon. We are trying to avoid lawyer fees as she has a very limited savings account and many more medical bills to pay from my step dads illness and eventual death. Thanks for all your answers and advice!
  • Aug 25, 2006, 03:42 PM
    excon
    Hello djk:

    A real estate assessment is NOT an evaluation!! The property could be worth MUCH more than that. MUCH MORE!

    I understand that you are trying to avoid lawyers fees. Sometimes, there are legal matters that CAN be handled without an attorney. Then there are times when they CAN'T be. Smart people know the difference.

    This is one of those time when you need a lawyer. What you are about to do could cost your mother a great deal MORE than the cost of a lawyer. I suggest that these matters are way beyond your ability to do them on your own. Frankly, I think you owe your mother the duty to do everything you can to help. If you try anything by yourself, you're screwing your mom.

    excon
  • Aug 25, 2006, 04:44 PM
    Dr D
    At this point there is nothing to lose by talking to the bank. You will probably want to speak with someone in their loss mitigation department. If they agree to work something out, be sure to get in writing their promise not to pursue your mom for any deficiency. Let us know what happens.
  • Aug 25, 2006, 05:57 PM
    ScottGem
    How old is this mortgage? Most banks do not write mortgages that don't leave some equity. As excon pointed out, an assessment is not an appraisal. You need to speak to a real estate agent and a attorney.
  • Aug 26, 2006, 05:05 AM
    Cvillecpm
    If the real estate assessment is NOT just the tax roll value, you may be well suited to talk to a Realtor about the sales prospect AND the bank about "give back options".

    In many states, the tax assessment is a valid figure of the market price; however, some states like CA, the actual assessment is NOT related to the market value.

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