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Fighting a Foreclosure When You Don’t Want Your Property

Times get tough for many families, and when trying to make mortgage payments and all the other costs of living, it’s not hard to fall behind. But, if you find yourself in this situation, the good news is that several solutions are available for South Florida homeowners.

For those who want out of their mortgage altogether and don’t want to keep their property, lenders may consider allowing you to return the house voluntarily. This is accomplished through a deed in lieu of foreclosure, but there are several pros and cons to consider before deciding on this option.

The Pros and Cons of a Deed in Lieu of Foreclosure

As mentioned earlier, if you are in a situation where you no longer can or want to keep your home, it’s possible to return your property to the bank. This is an attractive solution because it avoids the stressful and often lengthy process of foreclosure proceedings.

Another benefit of using a deed in lieu of foreclosure is that it avoids related costs to foreclosure actions and helps you move forward from this debt quickly. It also does significantly less damage to your credit than having your home foreclosed on.

But, there are some negative aspects to this legal avenue, as well. For instance, that earlier mentioned credit ding you’ll end up taking. Even though it’s not as bad as having a judgment take your home, it can still interfere with you getting approved for rental housing.

There’s also a possibility that your lender will ask the court to grant a deficiency judgment against you. This means they can collect the unpaid mortgage debt from you anyway. Finally, you have to consider what potential tax consequences you’ll face for letting go of your Ft. Lauderdale home.

Typically, the IRS recognizes the lender’s forgiveness of your mortgage as a cancellation debt. If your owed balance was greater than your home’s market value, your bank may file a 1099C for that difference. This translates into a type of income and the IRS will likely expect you to pay taxes on this forgiven balance.

There’s No Guarantee You’ll be Granted a Deed in Lieu of Foreclosure

It’s important to remember that while your lender is willing to work with you, they are in the business of making money. They don’t have to agree to a deed in lieu of foreclosure for your South Florida home.

Why would they deny this appeal?

  • They won’t make a profit (Agreeing is not profitable for them)
  • The home’s value is too low
  • You have encumbrances on the property like judgments or loans
  • The terms of your loan prohibits the use of a deed in lieu of foreclosure

To figure out if your home qualifies, you can speak with your lender or sit down with a qualified foreclosure defense attorney in the Ft. Lauderdale area to discuss your situation and available options.

Other Avenues for Avoiding Foreclosure and Walking Away from Your Home

There are other methods you should first consider when wanting to give up a home you can’t afford to keep:

Short Sale

When you can’t afford your mortgage and know that your home is unaffordable for you in the long run, requesting a short sale may be a viable option. When your lender agrees to this process, you can sell your property for less than you owe. You need to determine ahead of time if your bank will forgive this difference or not.

Bankruptcy

You might also want to consider filing for  bankruptcy that includes your mortgage in the petition. Many homeowners facing foreclosure are financially underwater in a variety of categories, especially credit card debt. When you include your home loan in your bankruptcy, a stay is automatic, and your lender won’t be able to collect until the case is resolved or dismissed.

Get More Information About Fighting Foreclosure Proceedings

Deciding to walk away from a property you’ve built a life in is an emotional process but sometimes necessary. To ensure that you choose the best approach to avoid foreclosure while voluntarily surrendering your home, make sure you have aggressive legal representation. Attorney Marc Brown provides high-quality legal services based on the decade he spent representing lenders throughout the South Florida area. His unique insight into how banks pursue foreclosure makes him your premier choice for legal counsel in this area of law. To schedule a no-cost legal consultation regarding foreclosures and deficiency judgments, call the law offices of Marc Brown today.