My mortgage company says it may be willing to accept either a short sale or a deed in lieu of foreclosure. What does that mean?
A “deed in lieu of foreclosure” is a legal settlement procedure where your mortgage lender agrees to accept the deed to your home (meaning that you give ownership of your home to the lender and you vacate the property) in exchange for forgiving the remainder of the debt you owe on the loan. If a lender says it would be willing to accept a “short sale” it means that your mortgage company will accept the proceeds from the sale of your house even though the amount does not cover the balance you owe on the mortgage. Few lenders are willing to accept these arrangements, but it is worth asking about as possible options if you fear foreclosure. Be aware that a short sale, or any type of debt forgiveness from your lender, may have tax implications and you should consult a tax professional or attorney to learn possible results. These options may also result in a negative credit rating so be sure you understand the implications before agreeing to any possible alternatives to foreclosure.
Related Questions
- Are there any exemptions from the capital gains taxation in a foreclosure, deed in lieu of foreclosure or short sale if the property is a principal residence?
- My mortgage company says it may be willing to accept either a short sale or a deed in lieu of foreclosure. What does that mean?
- What are the tax implications of a short sale, foreclosure, and deed in lieu of foreclosure?
