• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

Deed in Lieu of Foreclosure

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

C

CMAH101753

Guest
State of Florida. My home is in foreclosure. The "Les Pendens" notice has been filed. There are three mortgages on my property which has a market value of approximately $330,000.

The 1st mtg balance is $214,000.
The 2nd mtg balance is $40,000.
The 3rd mtg balance is $40,000.

1. It is my understanding that the junior lien holders (2nd, 3rd mtgs) will likely not bid on the home at the foreclosure auction and will be "foreclosed out". I am told that because of their relatively small balances as compared to the $214,000 first mtg, they likely would not want to bid on the property. Is this correct?

2. It is my understanding that it would be to the 1st mtg holder's benefit for me to simply "deed-in-lieu of foreclosure" over to them the deed to the property and vacate immediately rather than make this a protracted event for the 1st lien holder. Is this correct?

3. If I "deed-in-lieu of foreclosure" my property, will the junior lien holders (2nd & 3rd mtgors) be foreclosed out if they do not bid at auction? Is there even a foreclosure auction held when a property is deeded over to the 1st mtgor, as in this case? Or are the 2nd & 3rd mtgors just given an opportunity to purchase the home directly from the 1st mtgor?

4. I am considering implementing this "deed-in-lieu" process, if the 1st mtgor will agree to allow my neighbor to purchase the property from them for the balance (with arrearages owed included) owed, provided the 2nd & 3rd mtgors elect not to excerise their option to purchase the home. Is this plausible?

Thank you for your help!
Regards,
CMM
 


HomeGuru

Senior Member
CMAH101753 said:
State of Florida. My home is in foreclosure. The "Les Pendens" notice has been filed. There are three mortgages on my property which has a market value of approximately $330,000.

The 1st mtg balance is $214,000.
The 2nd mtg balance is $40,000.
The 3rd mtg balance is $40,000.

1. It is my understanding that the junior lien holders (2nd, 3rd mtgs) will likely not bid on the home at the foreclosure auction and will be "foreclosed out". I am told that because of their relatively small balances as compared to the $214,000 first mtg, they likely would not want to bid on the property. Is this correct?

**A: not true. Depending on the market value of the property, the 2nd or 3rd mortgagee may bid close or up to the first mortgage and their mortgage amount to protect their position.
************
2. It is my understanding that it would be to the 1st mtg holder's benefit for me to simply "deed-in-lieu of foreclosure" over to them the deed to the property and vacate immediately rather than make this a protracted event for the 1st lien holder. Is this correct?

**A: maybe but keep in mind that if the first mortgage lender takes the property, this lender must then deal with the 2nd and 3rd mortgagees. Depending on the market value of the property, it may be in the best interest of the lender to let the property go into foreclosure and have a new Buyer "cash them out".
If the foreclosure auction price is at the first mortgage balance, the foreclosure sale would wipe out the 2nd and 3rd mortgages off the title.
************
3. If I "deed-in-lieu of foreclosure" my property, will the junior lien holders (2nd & 3rd mtgors) be foreclosed out if they do not bid at auction?

**A: no. Unrelated Buyers may bid an amount covering the 2nd and the 3rd mortgages.
**********

Is there even a foreclosure auction held when a property is deeded over to the 1st mtgor, as in this case?
**A: no because the purpose of the auction is to remedy the foreclosure complaint. Once a deed-in-lieu of foreclosure takes place, the lender that filed foreclosure must file a dismissal. If the 2nd and 3rd mortgage lenders do not get cleared, they will not agree to a deed-in-lieu and one or both could then file a separate foreclosure action.
*************




Or are the 2nd & 3rd mtgors just given an opportunity to purchase the home directly from the 1st mtgor?
**A: it would be negotiated among the attorney's.
*********

4. I am considering implementing this "deed-in-lieu" process, if the 1st mtgor will agree to allow my neighbor to purchase the property from them for the balance (with arrearages owed included) owed, provided the 2nd & 3rd mtgors elect not to excerise their option to purchase the home. Is this plausible?
**A: highly unlikely. The 2nd and 3rd will not agree.
Thank you for your help!
Regards,
CMM
 

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top