Harris-Courage & Grady, PLLC
What is a Deed In Lieu?
The foreclosing mortgage company is suggesting a Deed In Lieu. What is that?
It is very expensive and time consuming for a mortgage company to foreclose. Sometimes, instead of foreclosing, they will ask you to sign a Deed In Lieu.
This means you sign a deed transferring your home to the mortgage lender. It is called a Deed In Lieu because it is done “in lieu” of a foreclosure.
In typical home ownership situations, most people think that they don’t own their homes but that the mortgage company owns their home.
This is not true.
You own your home but there is a mortgage against the home. If you fail to pay your mortgage, the mortgage company can foreclose. However, they do not get ownership of your home until after the foreclosure sale, assuming they buy your home at the foreclosure sale.
If you sign a Deed In Lieu you need to be prepared to move immediately because then you really will no longer own your home.
Even if the mortgage company is suggesting a Deed In Lieu, be aware that they will not agree to go forward with it if you have a second mortgage or if you have a judgment against you.
Their hands are tied by case law which states that if the first mortgage company accepts a Deed when there is a second mortgage or a judgment, then the second mortgage or judgment will became a first mortgage or lien on the property.
The mortgage company will do a title search, which takes time, before accepting a Deed In Lieu. If you have a second mortgage or judgment, the first mortgage company will likely be forced to foreclose because the foreclosure will eliminate these other liens on the property.
A little murky, right?
If your mortgage company is threatening foreclosure, we can help you decide which is your best option. Call us to schedule your appointment today.