Deeding title better than short sale
Some of the largest mortgage servicers and lenders in the country are gearing up campaigns to reach out to carefully targeted borrowers with cash incentives that sometimes range into five figures, plus a simple message: Let’s bypass all the time-consuming hassles of short sales and foreclosures. Just deed us the title to your underwater home and we’ll call it a deal. We won’t come after you to collect any deficiency between what you owe us on the mortgage and what we obtain from the home sale. We might even be able to wrap up the whole transaction in as little as 30 to 45 days. How about it?
Mortgage companies say troubled borrowers increasingly are signing up. One of the largest servicers, Bank of America, has mailed out 100,000 deed-in-lieu solicitations to customers in the past 60 days, and its volume of completed transactions is breaking company records, according to officials.
What precisely are deeds-in-lieu? The full name is deeds-in-lieu-of-foreclosure. They are voluntary transfers of property ownership from borrowers to creditors that make court-directed foreclosures unnecessary.
The concept is one of the oldest in real estate, but it got a special boost earlier this year when the Obama administration included it as an option in its Home Affordable Foreclosure Alternatives program, and mortgage giant Fannie Mae cut the penalty-box time for homeowners who use the technique from four years to two before they can qualify for another home mortgage. To sweeten the pot, Bank of America is offering cash incentives that range anywhere from $3,000 to $15,000 .
Deeds-in-lieu usually don’t work when there are multiple mortgages from different creditors encumbering the property. Also, though deeds-in-lieu do less damage to borrowers’ credit histories than foreclosures or bankruptcies, they definitely leave a mark. Fair Isaac, developer of the widely used FICO credit score, says on its “MyFico” Web site that deeds-in-lieu and short sales are both treated as “not paid as agreed” accounts, and are treated the same by the FICO scoring model.
Read more@http://www.bostonherald.com/business/real_estate/view/20100627deeding_title_better_than_short_sale/
As always,
Shawn