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By Sean A. Kelly
A deed in lieu of foreclosure California regulation would protect a home owner from foreclosure. However, it may not be so easy to try to negotiate with your bank to allow you to simply walk away from your property. This is because if you walk away your bank would have to go through all the trouble of selling your property off in the hope of recovering some if not all of the debt you owed them. My friend, Ross, is testimony to how difficult it could be to try to convince a bank or mortgage company to agree to a deed in lieu. Series of discussions and meetings ensued without reaching to any agreement. It was not until there was no other way but to foreclose his home that his bank finally agreed to a deed in lieu.
Ross definitely tried his very best to convince his mortgager that a deed in lieu of foreclosure California regulation would benefit both himself and the bank. The first point of argument that Ross used to persuade the bank to allow him to simply walk away was the fact that he had no second mortgage on the home. Therefore, his mortgager would not have to share the proceeds from the sales of his home with another party. The money would be all theirs. In fact, if they would actually gain any profit from the sales of his property he would not even be entitled to it. The profit would all be considered as the banks property. Ross was lucky that the value of his home was higher than the amount he owed his mortgager. If the value of his home was lower than what he owed the bank, it would have made his request for a deed in lieu a lot more difficult.
Ross mortgager also pointed out that if the proceeds from the sales were lower than the amount he owed the bank they would actually lose money. However, Ross insisted that a deed in lieu would be better than a foreclosure because a foreclosure would cost the bank more. Therefore by allowing a deed in lieu to take place they would be able to stop foreclosure; a win-win situation. He also made a point to demonstrate his hardship to his mortgager by way of copies of his pay stubs, monthly expenses and budget attached to a formal letter. Basically the intention was to show the mortgager that he had no income or cash to make the payments; not even the prospect of his finances improving in the near future. If his mortgager would not agree to a deed in lieu, they would stand to lose more than he would because as far as he was concerned he had already hit rock bottom while they still had the chance to recover their losses.
Ross was aware that it would be more difficult for him to apply for a new mortgage after foreclosure so he was persistent and insistent that his mortgagers would agree to a deed in lieu. Once he obtained their verbal agreement, he immediately requested that they put it in writing. However, Ross was not quite done. He knew that even after they reached an agreement to pursue a deed in lieu, there was no guarantee that they would not come after him for any deficiency or financial losses. So he also negotiated that they forgive the rescinded debt should the sale of his home rake in less than the balance that he owed them.
All in all, Ross was quite successful in negotiating for a deed in lieu. However, the entire negotiation process took at least 90 days and the record of his delinquency within those 90 days was documented in his credit report. Therefore, his credit score dropped significantly. But Ross was content because a foreclosure would have caused more damage to his credit rating than a deed in lieu.
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