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{ 4 comments… read them below or add one }
It is still a foreclosure.
Yes, usually just not as many or as much on the “legal” fees.
This is called forfeiting a deed in lieu of a foreclosure (or just “deed in lieu” for short).
The banks are likely to do this if it will save them a lot of legal fees, if there is equity in the property, or if they decide this is the best for all parties.
The only fees that pertain to this are the deed transfer fees - normally around $100-$400.
Now, if the banks suffer a loss in the transaction after the house is sold - they can still come after the owner for the remainder - or they can file a 1099 and count the losses as “income” to the former owner (whom will be responsible to pay taxes on that “income”). This is the same thing that would happen if it foreclosed and a loss occured during the sale of the property.
The good news is the owner will NOT have a foreclosure on their record.
I would talk to the loss mitigation department at your lender and see what their policy is about the options to avoid a forelcosure.
You want to terminate the mortgage agreement. To settle your outstanding loan with the mortgagee. You are leaving it to the bank to settle your outstanding loan, legal fees and estate agents fee and other bank charges that will occur. It is better you do such settlement yourself. Something must be done regarding the mortgage deed drawned up by Mortgage lender by the FSA, the regulator of Mortgage companies. From day one when the Mortgage agreement is signed by the borrower, it offer better protection to the mortgagee. Like they can take whatever actions necessary to get their money back, if the mortgagor cannot pay their monthly repayment. Some allowance must be made to the mortgagor during the current bad economic times, when redundancy occurs. Banks taking foreclosure actions are like ‘pouring oil into a buring fire’.