A Borrowers Guide to understanding the foreclosure alternatives of deed lieu and short sale - and how these options may benefit you!
- “The Borrower"
With a deed-in-lieu or short sale, you may be eligible for cash relocation assistance per HAFA guidelines. A Foreclosure does not offer this kind of option.
With a short sale, you may remain in the property while listed for sale.
A Deed-in-lieu and a short sale both result in all deficiency of payment being forgiven. A FORECLOSURE may result in a “DEFICIENCY JUDGEMENT”.
A Deed-in-lieu is reported to the credit bureaus as “PAY-IN-FULL” – “DEED-IN-LIEU”, while a short sale is reported as “DEBT SETTLED for less than owed” – both are less damaging to your credit score than a Foreclosure.
There is a shorter time to property resolution, that is, the time between beginning the process and its conclusion, with a “Deed in Lieu or short sale than with a Foreclosure.
As guaranteed by the Mortgage Forgiveness Debt Relief Act of 2007 (MFDRA), both a Deed-in-Lieu and short sale results in FORGIVENESS of Income Tax on canceled debt on homeowners qualified principal residence. A FORECLOSURE does not.
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