Question

Can I do a deed in lieu while my bankruptcy is pending?

Answer

First, let’s back up. A deed in lieu is a transaction whereby a homeowner signs over their home’s deed to their mortgage lender. A deed in lieu is a way for the homeowner to voluntarily surrender the house to the mortgage lender when the homeowner can no longer afford the home. However, there is a catch, the mortgage lender must agree to the deed in lieu; most of the time, the mortgage lender will not do so. There are various reasons why lenders do not accept deeds in lieu, but that topic is better served in a different post. The country is experiencing record foreclosures, not record deeds in lieu; that should give you some idea how rare it is for the bank to accept a deed in lieu. (more…)