Deed-in-Lieu of Foreclosure

There are only a few distinct changes to how the deed-in-lieu operates within the context of FHA-insured mortgages. An important prerequisite to note is a preference for having no junior liens.

Where a deed-in-lieu is successfully completed, the borrower is paid $2000 upon leaving the home. However, if any junior liens exist, that money will first go to pay off those junior lien holders – hence the preference for no junior liens.

Non-FHA Loans

Borrowers who do not currently have FHA loans can also attempt to refinance their existing obligation into one with FHA protection provided they owe more on their mortgage than the home is actually worth.

eligibility:

• lender participation is voluntary;
• lender/investor has to agree to a minimum write off of at least 10% of the unpaid principal on the first lien mortgage;
• principal balance on the first lien mortgage must have a loan to value ratio of 97.5% or lower;
• program is set to expire on 12/31/14;
• this program is also subject to a three month trial period;
• if the borrower fails to finish the three month trial period, they may be given a second chance.