As a homeowner, sometimes, you fall to financial hardships and these financial hardships can cause you to fall behind on your mortgage payments. When you fall behind on your mortgage payments and leave them unpaid, the bank has the ability to start the foreclosure process. If the foreclosure process is executed by the bank, the bank will take back the property due to the delinquent payments by the borrower.
If you are in this position, you as a Madison Wisconsin homeowner have a couple options to help mitigate or alleviate yourself from the foreclosure process. One of the options available to homeowners is the lost mitigation option, called died in lieu of foreclosure.
A deed in lieu of foreclosure is a loss mitigation option (along with a short sale, loan modification etc.) that is available to borrowers who found themselves in financial distress and are facing foreclosure.
In order to properly execute a deed in lieu of foreclosure, you will need cooperation and approval form the lender on the property. Your ability to execute a deed in lieu of foreclosure will vary from lender to lender, so we recommend getting in touch with your lender as soon as you know you are going to fall behind on payments to initiate the process. Each lender will have their own specific set of requirements and guidelines that the borrower will have to abide by to complete the process.
What is A Deed in Lieu of Foreclosure in Madison Wisconsin
A deed in lieu transaction is where the homeowner volunteers to transfer title of the property to the lender in exchange for a release of their mortgage obligation. We want you to understand that it is very expensive for a bank to work through the foreclosure process and actually take back a property, so sometimes it is in their best interest to just take the property back without these additional costs (legal fees, maintenance fees, etc).
When you execute a deed in lieu of foreclosure, you will essentially be handing back over control to the bank, at this time, they will make minor repairs or simply just list the property to recoup their debt obligation on the property.
How to Handle the Deed in Lieu of Foreclosure Process in Madison Wisconsin
The first step you need to take when trying to initiate a loss mitigation with a lender will be for the homeowner to formally reach out to the bank (lender) to make contact with the lender. We recommend that you reach out to the bank as soon as you know that you will be falling behind on payments or have fell behind on payments. The sooner you make contact and have a conversation, the better. It is very important for the homeowner to take control of the situation and be upfront and honest with the lender in order to resolve the issue.
Once you get in touch with the lender, you will request a loss mitigation package from the lender and simply explain your situation and your request. In order to initiate the process, you will need to fill out and submit this package back to the lender with additional information pertaining to your finances, expenses and recent hardships as to why you are now unable to make your payments. Some documents that may be requested upon submission are:
Bank statements (for all open accounts) over the past couple months
Recent W-2 Tax Returns (2 years)
A personal financial statement highlighting your income and expenses
Proof of income (recent pay stubs or profit and loss statement if self employed)
Hardship letter (explaining your current financial situation or cause of lack of payment)
In your Hardship Letter, you will explain to the lender your specific reasoning that you are now unable to make your current mortgage payments. Some examples of reasons you may no longer be able to make specific mortgage payments are:
Divorce
Job Loss
Illness
Medical Expenses
Natural Disaster
Sudden Deaths
After submission of your Hardship Letter, your lender will initiate a title search on the property. In most circumstances, a lender will only consider a deed in lieu option in Madision Wisconsin if they hold the first mortgage on the property. The lender will run the title search on the property to ensure that there are no other liens on the property (back taxes or other judgments). If judgments or liens are discovered on the title search, the homeowner will have the option to repay these judgments to proceed with the deed in lieu of foreclosure process.
If the lender completes the title search process and there are no liens/judgments on the property, the lender will then get the property appraised to determine the current value of the property. If the bank determines that this loss mitigation option will be a win/win situation for both parties involved, the borrower will be required to sign a document, called a "grant deed in lieu of foreclosure", which is the document that will essentially transfer ownership of the property to the bank.
The next document that needs to be signed is an estoppel affidavit. An estoppel affidavit will essentially set out the terms of the agreement between the lender and the borrower, and granting that the homeowner acted voluntarily, allowing the lender to take control of the property.
Conclusion
The deed in lieu of foreclosure process in Madison Wisconsin can be a viable option for homeowners who are in a situation where they have fell behind on payments due to some type of event that has caused them to begin missing payments. As the homeowner, you need to take responsibility and act promptly to communicate with the lender your hardships and reason for request. The sooner that you communicate with your lender, the better odds of the bank working with you to execute this option. The foreclosure process is something that no one wants to go through but sometimes, life events happen that results in our inability to make the payments we agreed to. Going through a foreclosure can be a serious event for a family and can cause lingering financial issues for families for a long period of time. We want you to know that there are several options out there to help in this situation, but the longer you wait to act, the worst the outcome will be.
If you are in a situation where you are behind on payments and are looking for another alternative solution or maybe you are to far down the foreclosure process and the bank is already initiating foreclosure, we believe we can help. We offer a simple solution where we will purchase your property in cash, pay the principal and the arrears on the property (if it makes sense for both parties). This will essentially eliminate the debt with the bank and relieve you from foreclosure. We offer a service where we purchase properties for cash, offer no obligation cash offers with the ability to close in as little as 14 days, while allowing the homeowner to make no repairs, paying no commissions or closing costs.
To learn more about the process, please click the link below. We would love to help you through this difficult time and offer our expertise to your family.
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