The Bank is Threatening to Foreclose – What’s the Best Way of Letting My Home Go?
If you live in New York, and are currently dealing with the threat of having your house foreclosed on, there are several non-retention options for you to think about.
What is a Non-retention Option?
Sometimes, no matter how hard you want to stay in your home, the circumstances just no longer work for you. This is when people threatened with foreclosure look at non-retention options. In “bank speak”, non-retention options are ways you stop a foreclosure process by giving up the right to your property. These options include:
- A Voluntary Sale
- A Voluntary Short Sale
- Deed in Lieu
- Cash for Keys
- Consent to Judgment of Foreclosure
- Abandonment
A Voluntary Sale
One of the most obvious solutions to a home you can no longer afford is to sell it and move somewhere cheaper. But if you are in the middle of a foreclosure proceeding it’s not that easy. You’ll need permission and a formal agreement from your lender guaranteeing that you will be paying back everything owed after the sale. Work with your foreclosure attorney so they can make sure you’ll be able to walk away from the process without any negative legal ramifications.
A Voluntary Short Sale
This can get a LOT messier than a regular sale. If you own far more than your house is currently worth (or in real estate terms: “underwater”), there are a lot more steps to take if you want to get your house sold. Your foreclosure lawyer will have to negotiate with your lenders to accept substantially less than what you currently owe. If you have more than one mortgage on your home, this can get even more complicated, as any lender with a lien on your home has to agree to take less. And if your lenders agree, you may still have to face “debt forgiveness taxes” from the IRS.
Deed in Lieu
With a Deed in Lieu agreement, you simply pass on the deed to your property directly to your lender. While this sounds like the easiest way to walk away from a foreclosure, it can also get complicated. Again, you’ll have to see if there is more than one lien on the property – which usually prevents a deed in lieu option. And you may also have to deal with tax ramifications, especially if the property was not your primary residence. Your foreclosure attorney will be able to guide you in whether this is the best option for you or not.
Cash for Keys
Did you know that there was an option where your lender pays you to leave your home? Lenders don’t actually like long, drawn-out foreclosure procedures – they sometimes end up paying their lawyers more than what your property is actually worth. Ask your foreclosure attorney if a Cash For Keys agreement would work for you. You may be able to negotiate a fee for giving up possession of your property, moving yourself and all of your belongings out of your home (leaving it “broom clean”), and walking away.
Consent to Judgment of Foreclosure
This is simply a complicated term for letting your lender foreclose on your property without you fighting back in court. While this may feel like giving up, it actually transfers all the responsibility of the deed to your lender, who then will have to deal with any secondary liens. And since you are not forcing your lender to defend the foreclosure in court, your foreclosure lawyer may be able to negotiate an agreement with the lender to consider your debt paid in full.
Abandonment
This may be your worst option. Simply packing up and disappearing can actually make things catastrophically worse. If your lender thinks they won’t be able to cover expenses by taking ownership of your property, they may stop the foreclosure proceeding and walk away as well. This leaves you with your name still on the deed of the house, which means local, state, and federal taxes are still your responsibility.
To read more about non-retention options for distressed real estate, click here – https://www.ny-bankruptcy.com/non-retention-options-for-distressed-real-estate
What to Do Next
There is a lot to know about the various non-retention option programs and it can easily get overwhelming. If you’d like to talk directly to a compassionate, knowledgeable, human being, reach out to New York foreclosure attorney Ronald Weiss for a free consultation. He can tell you what, if any, mortgage delinquency plan is right for you, and help you getthe process started. Call 631-823-7182 and take the first step to a fresh start.