{"id":5951,"date":"2024-08-28T07:44:22","date_gmt":"2024-08-28T11:44:22","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=5951"},"modified":"2024-08-28T07:44:26","modified_gmt":"2024-08-28T11:44:26","slug":"to-avoid-foreclosure-which-should-i-do-deed-in-lieu-or-short-sale","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/to-avoid-foreclosure-which-should-i-do-deed-in-lieu-or-short-sale\/","title":{"rendered":"To Avoid Foreclosure, Which Should I Do: Deed in Lieu? Or Short Sale?"},"content":{"rendered":"\n
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OK, it\u2019s decision time. You\u2019re dealing with financial challenges: a breakup, employment shakeups, or just too much debt against your property. You hold a deed, but can\u2019t keep up with your housing costs<\/a>. And you definitely want to avoid having a foreclosure on your credit history.<\/p>\n\n\n\n

What should you do now? A deed in lieu of foreclosure<\/em>? Or perhaps a short sale<\/em>?<\/p>\n\n\n\n

First, know that lenders tend to prefer short sales. A short sale in a time of high property values might take care of a deed holder\u2019s entire mortgage debt.<\/p>\n\n\n\n

Granted, pulling off a short sale takes a good deal more time than a deed in lieu. But with a deed in lieu, you give your home to the lender. This is a last-resort alternative to foreclosure.<\/p>\n\n\n\n

With that introduction, let\u2019s walk through a Q&A.<\/p>\n\n\n\n\n\n\n\n

First, Should Foreclosure Be Avoided at All Costs?<\/h2>\n\n\n\n

A foreclosure hits a credit profile harder than its alternatives. But not by much. And foreclosure gets the job over and done. That said, foreclosure is an expensive, time-consuming, and all-around unpleasant experience.<\/p>\n\n\n\n

So, first, are you sure your situation is as serious as you think it is? Perhaps the lender would extend a repayment plan, or modify your loan. Talk to the mortgage company and be sure you understand your range of options.<\/p>\n\n\n\n

If you decide to try to avoid foreclosure, ask the mortgage servicer for a loss mitigation application. It will be a short sale request, or a deed in lieu request. You\u2019ll submit tax returns, account statements, and details of your monthly income and expenses.<\/p>\n\n\n\n

But what\u2019s the better form of mitigation: deed in lieu, or short sale? Let\u2019s take a brief look at each of these, along with their pros and cons.<\/em><\/strong><\/p>\n\n\n\n

A Short Sale: Often the Best Way Out of Debt<\/h2>\n\n\n\n
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If you see pre-foreclosure<\/em> sales, that means the deed holder is attempting a short sale. How does it work?<\/p>\n\n\n\n

A deed holder falls behind on a mortgage debt and goes into a  default situation. A short sale could be the best way out of the jam. So the deed holder submits a statement declaring:<\/p>\n\n\n\n