Deed in Lieu

Orlando Deed in Lieu of Foreclosure Attorney | Deed in Lieu of Foreclosure: Is it right for you?

Orlando Deed in Lieu of Foreclosure Overview:

• What is a Deed in Lieu?
• Benefits to a Deed in Lieu
• Disadvantages to a Deed in Lieu
• Tax Consequences

Orlando Deed in Lieu of Foreclosure Details:

What is a Deed in Lieu?
A deed in lieu is really a pleasant foreclosure. With a deed in lieu of foreclosure, you give your home to the lender (the "deed") in exchange for the lender canceling the loan. The lender promises not to initiate foreclosure proceedings, and to terminate any existing foreclosure proceedings. Be sure that the lender agrees, in writing, to forgive any deficiency (the amount of the loan that isn't covered by the sale proceeds) that remains after the house is sold. Before your lender will accept a deed in lieu of foreclosure, it will probably require you to put your Orlando home on the market for a period of time (three months is typical). Banks would rather have you sell the house than have to sell it themselves.

Benefits to a Deed in Lieu
Many believe that a deed in lieu of foreclosure looks better on your credit report than does a foreclosure or bankruptcy. In addition, unlike in the short sale situation, you do not necessarily have to take responsibility for selling your house (you may end up simply handing over title and then letting the lender sell the house).

Disadvantages to a Deed in Lieu
There are several downfalls to a deed in lieu. As with short sales, you probably cannot get a deed in lieu if you have second or third mortgages, home equity loans, or tax liens against your Orlando property. In addition, getting a lender to accept a deed in lieu of foreclosure is difficult these days. Many lenders want cash, not real estate – especially if they own hundreds of other foreclosed properties. On the other hand, the bank might think it better to accept a deed in lieu rather than incur foreclosure expenses.

Tax Consequences
Beyond the lender debt repercussions, a deed-in-lieu also carries tax implications. A deed-in-lieu is considered a cancellation of debt, or COD, and before 2007, this could be counted as income in some tax situations. The Mortgage Debt Relief Act of 2007 offers tax relief for people who receive some form of debt forgiveness. This act enables taxpayers to exclude up to $2 million in debt forgiveness from being counted as taxable income and will be in effect through 2012. Consult your tax preparer to determine if you qualify.

If you’d like further information about deeds in lieu of foreclosure, contact our Orlando law firm at 407-647-8833

BAKER LAW, PL serves the Central Florida and seven-county Orlando area, including the cities of Sanford, Lakeland, Lady Lake, Kissimmee, Maitland, Lake Mary, Oviedo, Winter Garden, Winter Park, Windermere, Lake Nona, Apopka, Mount Dora, Winter Springs, Longwood, North Orlando, South Orlando, East Orlando and West Orlando, Melbourne, Titusville, Cape Canaveral, Daytona Beach and New Smyrna Beach, and the counties of Orange, Seminole, Lake, Polk, Brevard, Volusia and Osceola.