Understanding Deed in Lieu of Foreclosure
When you take out a home mortgage in Florida, the house is pledged as collateral on the loan and the bank receives a lien on the property. This gives the lender the right to enforce the lien by foreclosing on the property in the event that you default on the loan. The strategy of carrying out a deed in lieu of foreclosure is to circumvent this process and spare the bank the effort and expense of judicial foreclosure by approaching them with an offer to surrender the deed. In exchange for the deed, the bank releases the borrower of any further obligation to pay on the loan.
In order to carry out a deed in lieu, it is necessary to first obtain the bank’s approval. If you merely leave the house and fail to contest the foreclosure, you will be doing a strategic default, which is also referred to as “jingle mail,” an allusion to the idea of mailing the house keys to the bank. Strategic default is not generally advisable, as it is likely to result in a foreclosure being entered on your credit report and it may even leave you at risk of being sued to pay the bank for any deficiency between the sale price of the home and the remainder of the loan.
Ocala Foreclosure Defense Attorney for Deed in Lieu Cases
Contact us at The Law Offices of Justin McMurray, P.A. if you are at risk of foreclosure and are interested in exploring your options for pursuing a deed in lieu. An Ocala foreclosure defense attorney from our firm can review your case to determine whether this is the best course of action for you or if you would be better off negotiating with the bank for a short sale. We offer free case evaluations and we look forward to speaking with you.