Banks Turning to Deeds-in-Lieu of Foreclosure?

Short sales and loan modifications have grown , but banks are also turning to deeds-in-lieu of foreclosure more too. 20,000+ deeds-in-lieu of foreclosure occurred nationwide in 2012,  up nearly 40 percent from 2011, according to RealtyTrac.

For example, deeds in lieu of foreclosure skyrocketed 76 percent year-over-year in California, 53 percent in Nevada, and 49 percent in Florida.

Deeds-in-lieu of foreclosure permit a lender to take  a home without having to undergo the foreclosure process. The home owner is allowed to leave their mortgage debt and avoid foreclosure by turning over the home to the bank. Often times, a deed- in-lieu of foreclosure offers “cash for keys,” providing a cash payment to the distressed home owner in order for them to vacate the home, without letting the home fall into foreclosure.

Source: “Deeds in Lieu of Foreclosure: Naughty or Nice?” Forbes (April 23, 2013)

More Military Can Take Advantage of HAFA

More military service members who are underwater on their homes may now be able to take part in the Home Affordable Foreclosure Alternatives program, allowing them to qualify for short sales and deeds-in-lieu of foreclosure. 

The Treasury Department on Thursday clarified its guidelines for HAFA, after many military families had complained that the program failed to consider a permanent change of station as a financial hardship. The omission was preventing many from taking part in the program. Many military members who were underwater on their homes say they were current on their mortgage until receiving orders to move. 

“An example of such hardship includes a service member citing a ‘Permanent Change of Station’ order as the basis for his or her financial hardship when requesting HAFA even if such service member’s income has not been decreased, so long as the service member does not have sufficient liquid assets to make his or her monthly mortgage payments,” the Treasury said in a directive sent to mortgage servicers Thursday.

Source: “Treasury Moves to Help More Military Qualify for HAFA,” HousingWire (Sept. 29, 2011)

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