Jan
07
Deed in Lieu to Avoid Foreclosure
By1. In come cases, the borrower must attempt to sell the home for its fair market value for at least 90 days before the lender will consider this option.
2. This option may be unavailable if there are other liens on the borrowers home, such as judgments from other creditors, second mortgages, or tax liens.
Advantages of a Deed in Lieu:
o Possible tax considerations, talk to your tax accountant about the 1099 ordinary income for the gift of forgiven loans, as well as the insolvency exceptions.
o Problematic option if you have a 2nd or 3rd loan, line of credit secured by the property. Although the 1st lien holder of the property may agree to a deed-in-lieu of foreclosure the subsequent lien holder have not. The subsequent lien holder loans can become unsecured debt that is attached to and stay with the borrower to pay off.
Example of a Deed in Lieu:
Sam lost his job, and after 2 months of attempting to find employment, decided he would move to another state. Sam called the lender to advise them of his situation. Sam decided to sign over a deed in lieu. In exchange, although months later the property sold for $69,000 less than the mortgage owed, the lender did not submit a 1099 tax statement for the difference. This saved Sam thousands in additional income, which would have been added in to his taxes.
K. Patrice Williams has a BA in Economics as well as a law degree. She has successfully managed both residential and commercial multi-million dollar income producing assets and budgets for more than 10 years. As a 1st year law student, Patrice established a real estate development and consulting business and acquired over 30 rental properties. As the housing market values decreased- like millions of other Americans-her properties were negatively impacted by shifting ARM’s, combined by a sluggish economy. Patrice has researched and personally implemented almost all of the pre-foreclosure techniques detailed in the book: “6 Simple Steps to Avoid Foreclosure”. http://www.avoidforeclosuremanual.com
K. Patrice Williams has a BA in Economics as well as a law degree. She has successfully managed both residential and commercial multi-million dollar income producing assets and budgets for more than 10 years. As a 1st year law student, Patrice established a real estate development and consulting business and acquired over 30 rental properties. As the housing market values decreased- like millions of other Americans-her properties were negatively impacted by shifting ARM\\\\\\\’s, combined by a sluggish economy. Patrice has researched and personally implemented almost all of the pre-foreclosure techniques detailed in the book: \\\\\\\”6 Simple Steps to Avoid Foreclosure\\\\\\\”. http://www.avoidforeclosuremanual.com
