The Disadvantages of Deed-in-Lieu-of-Foreclosure Proceedings

There is no question that mortgage companies can put an unbearable amount of pressure on customers. Foreclosure Laws demand that deed-in-lieu of-foreclosure proceedings be entered into voluntarily by customers. Unfortunately, given the situations people find themselves in, it should be readily apparent that the voluntary requirements are little more than a social convention. 

Aside from this, there can be a number of disadvantages to choosing Deed-in-lieu of Foreclosure arrangements. To begin, you will be taking an enormous risk on the economy improving. While it can still happen, there are many factors that have yet to be revealed about the next set of stresses that will throw the economy into another tailspin.

When you elect to turn over your deed, the mortgage company will try to auction off the property. Even a year ago, this would have been a viable way to get out of your mortgage without a full foreclosure proceeding. Today, many mortgages are higher than the current worth of the property.  

Without a question, banks follow the golden rule issued by Benjamin Graham, they do not lose money. Unfortunately, once you hand over the deed to your property, you will have no control over saying whether or not to accept an auction bid on the property. As a result, if the sale of your property does not pay off the mortgage, they will take you to court in order to obtain a deficiency judgment. Not only will this leave you without a home, may leave you with a legal judgment on your record, and worse debt than you had before.