If you've been thinking about pursuing a deed in lieu of foreclosure to protect your property, it's important to understand exactly what the process entails. You may be wondering if you need a real estate attorney or not. The services of a real estate attorney may not be required to complete the process, but it's typically in your best interest to have a legal professional to help you. After all, the foreclosure and financing rules are complicated and can be easily misinterpreted without legal expertise. Here's a look at the process and what an attorney can do to help you.
Understanding the Deed in Lieu of Foreclosure
The deed in lieu of foreclosure is the end result of a contract that's negotiated between you and the mortgage lender. It transfers the ownership of the home to the lender in exchange for eliminating the balance of the mortgage. While it means that you still sacrifice your home, it may be easier on your credit rating than foreclosure.
Considering a Deed in Lieu of Foreclosure
It's often in the best interest of both the lender and the homeowner to pursue a deed in lieu of foreclosure instead. As the homeowner, it protects your credit report from a foreclosure, which can make it hard to get a mortgage again in the future. And, it gives you the flexibility to negotiate the settlement terms, which you don't get if your lender forecloses on the house. This may even allow you to set stipulations where the lender can't come after you for any deficiency between the value of the home in a future sale and the balance of your mortgage.
For your lender, this option may cost less than filing a foreclosure, because there aren't as many legal requirements that must be met. And, the process doesn't have to depend on the courts, so it can be completed quicker.
Exploring the Benefits of Legal Support
If you're going into negotiations for a deed in lieu of foreclosure, you may find yourself concerned about your lender coming after you later for more money. If you're not clear on the legal terminology of the contract, you may put yourself at risk of this. The best way to protect yourself from having something come back to haunt your finances is by working with a real estate attorney (such as one from Levin & Levin, LLP - Attorneys at Law) to create the contract. Your real estate attorney will help you understand the legal terminology of the contract so that you aren't surprised by something later.
Do you understand the legal jargon involved with a real estate transaction? Neither did I until I started buying houses every few months. When I started flipping houses, it forced me to become much more familiar with real estate paperwork. Unfortunately, I realized that a few of my earlier mistakes may have led me to make errors that cost me money. From that point on, I decided to hire a real estate lawyer to go over all of my paperwork before it was submitted. After I started working with my lawyer, it was incredible to see how much easier things were.