You spoke with your lender and explored all the available options but your financial situation does not allow you to sustain any payment plans offered by the bank, what do you do now?
- You can do a Deed-in-lieu of Foreclosure or DIL where you offer to transfer the property to the lender without going through the foreclosure process. Do this as a last resort. Usually this process is initiated by the borrower and results in a settlement of the entire debt. If other liens on the home exist and depending on the type of liens a bank may not agree to do a DIL. Even if the bank accepts the DIL other liens may remain and the borrower may be pursued even after the home is sold. Your credit rating will be damaged for up to 7 years.
- You can do a short sale where the house is sold for less than the total amount owed the bank. The lender will still have to approve the short sale if they determine that this will net them more than a foreclosure. In order to qualify for a short sale a true hardship is required and the lender convinced that the homeowner does not have the means to sustain the debt.
- You can choose to walk away and do nothing. This option results in foreclosure with damage to your credit for a period of 7 years.
If you are ready to get started and explore your options go here