Deed in lieu of foreclosure
Could handing over the deed and thereby avoiding foreclosure be the answer for homeowners considering walking away from their property? Citigroup seems to think so, as today it announced a pilot program called “Foreclosure Alternatives” that would provide their company with the deed to the house without having to go through the legal process of foreclosure and allow the homeowner to remain in their residence for six months. This program will be launched on a limited scale in Texas, Florida, Illinois, Michigan, New Jersey and Ohio for approximately 1,000 homeowners. Traditionally, homeowners owing significantly more on their house than it is worth and not confident about an increase in home values would consider walking away from their property rather than continuing mortgage payments that seemed fruitless. Mortgage companies like Citigroup seem to have recognized this and in order to save themselves additional work to foreclose on properties, have offered an alternative “deed in lieu of foreclosure” for homeowners not qualifying for mortgage modifications or short sales. By avoiding foreclosure, the homeowner also avoids damaging their credit. However, this relief is only helpful if the homeowner intends to pay off any amounts still owing on the mortgage and mortgage companies can explain the programs they offer to their qualified account holders. If not, bankruptcy may offer the ultimate relief for such situations.
Disclaimer: This does not constitute legal advice. Please contact a Bankruptcy attorney in your jurisdiction to discuss your particular situation.
