If you ever find yourself in foreclosure, there are a few smart moves you can make in order to avoid the process. First of all, you should set up a meeting or phone call with the lender and take a mortgage expert along if at all possible. Make sure that their foreclose is legitimate and contact the appropriate state and local offices to verify their claims.
Assuming everything about the foreclosure process is legitimate, you should next consider a deed in lieu of foreclosure. This deed instrument results in the same outcome as a foreclosure, but the process is much more simple. By taking this route, the borrower avoids public disclosure of foreclosure and is immediately released from most or all obligation to the lender. The process is easier for lenders as well and they will often offer much better terms than they would for a conventional defaulted loan.
There are a few stipulations related to obtaining a deed in lieu of foreclosure. First of all, your real estate must be collatoral for the real estate that is to be transferred. From a legal perspective, all parties must enter into the agreement voluntarily, in good faith, and only with consideration greater than or equal to the market value of the property. Most of the time the lender will not continue the process if the market value is greater than the borrower's debt.
Lenders rarely suggest the deed in lieu of foreclosure process because the instrument is required to be voluntary. Submit a written offer and it is likely that the lender will be interested in exploring that option. For more information about foreclosure please visit the HUD's Foreclosure Website.