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Deed In Lieu of Foreclosure This is when you simply give the property back to the bank. This is the quickest way to get out from under an upside down house, but there are many banks that are not entertaining this option. A deed in lieu must be agreed to by both side (ie you and the bank). One side can not force the other into a deed in lieu. If you simply want to walk away, contact your lender to see if they are willing to entertain this option. The Down Side: It will damage your credit, though not as bad as a foreclosure. You will have to leave your home more quickly than some other options. Though it is possible to do a Deed In Lieu if there is a second mortgage on the property it is highly unlikely. If you only have one loan it is a much more viable option. The lender may be able to get a deficiency judgment. In other words they may be able to come after you for the difference between what you owe and what they sell the home for. The difference between the balance of the loan and what the bank sells the home for may be considered income and may be taxable.
Please consult your atorney or accountant for more information about the ramifications of a deed in lieu of foreclosure. |