Diana Hill
Online Trading Academy
No matter what situation you find yourself in; looking for a property, selling a property, modifying your loan, or getting from under a property, you will need to be persistent and informed.
If foreclosure is something you or someone you know is considering, here is an option, “Deed-in-Lieu” of Foreclosure. It’s an alternative to foreclosure. This process can have significant benefits for both parties. For lenders, it helps avoid or reduce the delay, expense and possible uncertainty of going through the foreclosure process. For borrowers, it can eliminate or reduce the embarrassment of a public foreclosure sale and provide a resolution of personal liability and personal guarantee issues with respect to the debt.
A few things for a borrower to consider:
Borrower will want to negotiate for release of any personal liability, no negative report to credit agencies and a covenant not to sue.
Obtain an assurance from the lender that the holder of the promissory note has cancelled the original promissory note.
Tax consequence of a “Deed-in-Lieu” is generally treated as a sale of the property, with gain or loss determined by the difference between the amount of the debt and the adjusted tax basis of the property. The borrower might have to come up with cash for the equity portion.
A few things for a lender to consider:
If a loan is recourse, the lender may want to require some cash payment from the borrower to satisfy some portion of the debt, or maintain the ability to pursue the borrower and guarantors for a portion of the debt.
Consideration must be given to potential problems and liabilities relating to leases, especially for tenants with whom the lender does not have a subordination agreement.
The state of title to the property is critical for the lender. A junior-lien is not extinguished by a “deed-in-lieu” as they would be on a foreclosure.
You can see that there are many pitfalls for lenders to consider “deed-in-lieu” transactions and many circumstances in which a lender will not want to accept a “deed-in-lieu.” The potential benefits for lenders and borrowers in appropriate situations make it worth consideration.
In today’s market, there is an opportunity for investors to get potential foreclosure properties early and be of benefit to the homeowner. This option is what I call “Pre-Foreclosure with equity.” What that means is that someone is in trouble and can’t continue to pay their mortgage, but has some equity in the property. As an investor, you have the opportunity to purchase that property directly from the homeowner who is facing foreclosure. You also help the homeowner by saving their credit.
“Pre-foreclosure with equity” is a unique off market option for purchasing property.
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Editors’ Picks
EUR/USD climbs to two-week highs beyond 1.1900
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GBP/USD hits three-day peaks, targets 1.3700
GBP/USD is clocking decent gains at the start of the week, advancing to three-day highs near 1.3670 and building on Friday’s solid performance. The better tone in the British Pound comes on the back of the intense sekk-off in the Greenback and despite re-emerging signs of a fresh government crisis in the UK.
USD/JPY recedes to multi-day lows near 155.50
USD/JPY is pulling back sharply at the start of the week, slipping back toward the 155.50 area as speculation mounts that authorities could step in to rein in further Yen weakness. That narrative gained traction after PM S. Takaichi secured a landslide victory in Sunday’s election, stoking expectations of a tougher line in defence of the domestic currency.
Editors’ Picks
EUR/USD climbs to two-week highs beyond 1.1900
EUR/USD is keeping its foot on the gas at the start of the week, reclaiming the 1.1900 barrier and above on Monday. The US Dollar remains on the back foot, with traders reluctant to step in ahead of Wednesday’s key January jobs report, allowing the pair to extend its upward grind for now.
USD/JPY recedes to multi-day lows near 155.50
USD/JPY is pulling back sharply at the start of the week, slipping back toward the 155.50 area as speculation mounts that authorities could step in to rein in further Yen weakness. That narrative gained traction after PM S. Takaichi secured a landslide victory in Sunday’s election, stoking expectations of a tougher line in defence of the domestic currency.
Gold treads water around $5,000
Gold is trading in an inconclusive fashion around the key $5,000 mark on Monday week. Support is coming from fresh signs of further buying from the PBoC, while expectations that the Fed could turn more dovish, alongside concerns over its independence, keep the demand for the precious metal running.
Crypto Today: Bitcoin steadies around $70,000, Ethereum and XRP remain under pressure
Bitcoin hovers around $70,000, up near 15% from last week's low of $60,000 despite low retail demand. Ethereum delicately holds $2,000 support as weak technicals weigh amid declining futures Open Interest. XRP seeks support above $1.40 after facing rejection at $1.54 during the previous week's sharp rebound.
Japanese PM Takaichi nabs unprecedented victory – US data eyed this week
I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.
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