Option #6
“THE DEED-IN-LIEU OF FORECLOSURE”
The Deed-in-Lieu of foreclosure is when you give up ownership of your home and deed it back to the bank. The bank will always accept this; however; it’s not a good option for you. The reason it’s not a good option is because the bank could come after you, the homeowner, for a deficiency judgment. Let’s explain what a deficiency judgment is. The bank takes back a house that has a mortgage balance of $200,000 and is worth $200,000. The bank ultimately sells the house for $150,000. Since the bank just lost $50,000, they come after you for it. This is the deficiency. They will chase you, the homeowner, for the amount due. The banks do not tell you that they will chase you for that balance. Remember, the banks are sneaky. This is really never an option, unless you get it in writing from the bank that they will not chase you for a deficiency judgment or 1099 you on your taxes. A 1099 is ordinary income to you that is reported to the IRS. If you were in the 30% tax bracket, you would have to pay approximately $15,000 in taxes to the IRS for losing your home. Pretty sneaky on the bank’s part, don’t you agree? If you have any questions about this, please contact me at (304) 876-2538 Good Luck and God Bless