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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 39045
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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I am convinced that deed in lieu of foreclosure is the only

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I am convinced that deed in lieu of foreclosure is the only option to give condo home back to mortgage company, however it also a good option i feel. given following info, wanted to ask couple questions. information: 1) condo on 2009 bankruptcy 2) made consistent payments since then, 5 months are listed on credit report as late 3) condo located in virginia is at least $100,000 below what is owed on combined 1st, 2nd mortgages. 4) deed in lieu of foreclosure is actually listed as an option on mortgage company website as an option under loss mitigation options. 5) missed 1/2 month income in Jan from medical reasons. 6) current on both mortgages. 7) large tax refund available to me before next mortgage payment in Feb. 8) don't like condo, don't wan't to live Questions: 1) How can i best negotiate deed in lieu of foreclosure and convince mortg. co that is only option? 2) how difficult to find rental leases after wards. Thank you.
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 7 years ago.

I read your previos question-answer session with the other attorney. You were informed that by continuing to pay, you reaffirmed the debt to the lender. This is an incorrect statement of law. Under 11 U.S.C. §524(c), a debt discharged under Chapter 7 cannot be reaffirmed, execept as part of an affirmation agreement filed with the bankruptcy court prior to discharge.


Therefore, based on your stated facts, you are no longer responsible for your mortgage, and you can literally walk away from the property. You would save the lender a lot in additional costs by offering a deed in lieu, and the lender has nothing to lose by accepting it. So, send them a letter and offer to give it to them. You actually could offer to provide it in exchange for money from them, because processing a foreclosure will cost the lender several thousand dollars.


Note: don't threaten to walk away unless the lender complies with your demands. That would be criminal extortion.


Worth a shot.


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Customer: replied 7 years ago.

thank you for very valuable information. does it mean that if i walk away with or without sending them a letter of offering deed in lieu, something additional will go on credit report? either 1) deed offering or 2) public record of foreclosure. in addition to the already discharge? thereby bringing credit score even lower and lowering chances of approval of new home in future.


just as added note, i would go with 1), sounds like would at least not be part of the economic problem if helped out mortgage co., at least not a larger problem if i just walk away.

Expert:  socrateaser replied 7 years ago.
The foreclosure would appear on your credit report. The deed in lieu would not, as far as I'm aware. Though, I doubt it could make your credit score worse at this point. In my experience, the new threshold for getting a home loan is a FICO of 745. In other words, there are now two types of people in the world: those who qualify for a loan, and those who do not. There are no marginal cases.
Customer: replied 7 years ago.
Thank you. Have been provided good overall picture of conditions and options and has been very entertaining conversations. Unfortunately, or fortunately depending on how you look at it, the only legal extortion comes from the other side of the lender-buyer agreements, and not from the the two types of people in the world.