Deed In Lieu
Is a deed in lieu of foreclosure right for you?
With a deed in lieu of foreclosure, or deed in lieu, you agree to transfer the title or ownership of the property to the owner or servicer of the loan in order to avoid foreclosure sale and satisfy all or a portion of the mortgage debt. If you have been evaluated but do not qualify for a loan modification and have been unable to sell your home through a short sale, a deed in lieu may be an option.
You may be eligible if one or more apply:
- You're experiencing financial hardship, such as reduced income, medical expenses, or divorce
- You can't afford current mortgage payments
- You're unable to modify a current home loan, or don't wish to remain in your house due to other circumstances, such as a job relocation
- You tried for at least 90-120 calendar days to sell your house at a fair market value with the help of a licensed real estate agency and weren’t successful
Depending on the loan type, you may qualify for funds to help with relocation expenses1 and other housing debts.
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First, we'll evaluate you for programs that allow you to keep your house. If there aren't other options, and you have been unable to sell your house through a short sale, a deed in lieu may be possible. You'll need to provide:
- The loan number
- Foreclosure notices or dates you've received
- Subordinate liens on the property, if applicable
- Information on a loan modification, if you were considered for one
- A letter explaining your current financial difficulty
Depending on your circumstances, we may need additional documentation. If so, we'll contact you to let you know what information is needed. You’ll also be connected with a Customer Relationship Manager who'll work with you throughout the process.
After all required documents are received, we'll order an appraisal of the interior of the house to determine the current market value, compare the property's value to the balance on the first mortgage and perform a title search.
The property must be free of any liens, such as a home equity loan or line of credit, when the title is transferred to us. If you have a Bank of America home equity loan or line of credit, we'll take care of getting approvals for a deed in lieu request. If you have a home equity loan or line of credit with another lender, you'll need to ask that lender to send us a Second-Lien Release, indicating their approval for you to pursue a deed in lieu. This process takes approximately 90 calendar days. Please contact lien holders right away to avoid delays.
If a deed in lieu request is approved, you'll get a letter outlining the terms and conditions as well as documents that you’ll need to sign and return.
Once received, we'll prepare the final release documents which will detail your decision to sign the property over to us. You must send us signed, notarized release documents within 14 calendar days.
Once submitted, you may have up to 30 calendar days to relocate, depending on the law in your area. Depending on the loan type and circumstance, you may qualify for funds to help with relocation expenses1 and other housing debts. We’ll let you know.
When the deed in lieu is finalized, this settles the mortgage and any other loans against the property. The amount of debt satisfied by this transfer of ownership is based on the approved value of the home. In some cases, you may be responsible for a remaining balance of the mortgage debt over and above the approved value (also known as the deficiency).
If we forgive any amount of mortgage debt, there may be possible tax consequences. Please consult a tax advisor for more information about how this could affect you.
We'll report the sale to the major credit reporting agencies as "deed received in lieu of foreclosure on a defaulted mortgage."
What if I'm not eligible or get declined?
Make sure to review all your options. If you have questions about them, please contact us for assistance. Otherwise, normal processing of a loan will continue and may include foreclosure, subject to applicable law.
1 The relocation assistance payment is calculated based on the appraised value of your property and the program rules. The total amount will be no more than $3,000, if you qualify. The payment will be delivered after the closing if you comply with all terms and conditions of the program, which include but are not limited to the following: a valuation of the property must be completed and you must satisfy all subordinate liens and provide clear title for the property. If you are still responsible for a deficiency balance after the sale, you should be aware that this relocation assistance will increase that deficiency since it reduces the amount available to apply towards a mortgage debt. If you do not comply with all terms and conditions of the program, you will not receive the relocation assistance payment. The amount of any relocation assistance will be reported to the Internal Revenue Service (IRS) on the appropriate 1099 Form or Forms. We suggest that you contact the IRS or your tax preparer to determine if you have any tax liability. In order to receive the relocation assistance, the sale of the property must close by the closing date in the short sale agreement. Bank of America reserves the right to change or alter the relocation assistance at any time.