If I try a short sale and it doesn't sell before foreclosure can I give the deed to the bank and avoid the foreclosure?

Answer

You can't just give them the deed, no. All you can do is offer it to them and ask them to accept it instead of taking the property all the way through the foreclosure process.

The bank doesn't have to accept the deed in lieu of foreclosure, as it's commonly referred to. But they will want to have seen that you have tried to sell the house for a period of time before they will even consider accepting a deed in lieu.

If you have run out of all other options, the bank will be more willing to consider taking the property back. So the fact that you're attempting a short sale is good. Don't wait until the last minute before the sheriff sale to offer the deed in lieu, as well, because it will be more cost-effective at that point for the bank just to carry on with the foreclosure and sell the house.

But, if the short sale doesn't work, contact the bank and offer the deed in lieu of foreclosure. They'll have more paperwork and procedures for you to do, but it will help you get out of foreclosure a little sooner and won't be as bad on your credit.

Lets look at this a bit from the lender's side. It will help to understand some of their issues so you can negotiate a better short sale.

Do understand that negotiating a short sale can be difficult and pretty stressful as the lenders are overwhelmed with loans to sort out. How you submit the information, what you say and how you focus their attention on the defects and other things going on matters a great deal.

One reason a lender may decline to take the property back without a full foreclosure process can be the junior liens. Many times people in default on one loan are also in default on other loans, have back taxes (property or personal), liens from other creditors and similar. If the lender completes the foreclosure then the junior liens will no long remain on the property though the borrower will still owe the money in most cases.

Other things to consider. When a lender accepts the deed in lieu on a property they are missing out on the opportunity to see if the property would sell at auction. A deed in lieu is used to quickly move the process along so that the borrower hands over the property in reasonable condition plus waives their rights of redemption. Redemption can be pretty long in some US states. A short sale is better as the lender settles and there is no need to market the property as an REO like there would be with a deed in lieu.

• What is your Ability to analyze a variety of commercialconstruction and retail mortgage lending including single family residential multi-family small and mid-size commercial construction?
• Can a private citizen in the US mortgage his residence directly to a foreign bank?
• Sta mesa manila postal code?