Quitclaim deed in lieu of foreclosuure?

[kk1981]

What is the name of your state? Iowa

So I co-own a house with a woman who took off on me last year. We're both on the deed and mortgage. She chose to sue me for partition a few months ago. There's hardly any equity in the house and I don't see the purpose in fighting over the breadcrumbs.

The problem is that it will go into foreclosure very soon. Is it possible for me to sign a quitclaim deed in lieu of foreclosure? And will this effectively end the partition lawsuit? I have no interest in fighting ot out with her.

 

[Taxing Matters]

Is it possible for me to sign a quitclaim deed in lieu of foreclosure? And will this effectively end the partition lawsuit? I have no interest in fighting ot out with her.

A deed in lieu of foreclosure is where you sign over the deed (a quit claim deed could be used) to the lender in order to avoid foreclosure. Ideally you want to negotiate with the lender that it will take the deed and forgive any balance due left after the lender sells it so that you at least don't end up owing any money out of it. The lender might not let you do it for your half without her joining in on deal. You'll need to talk to the lender to see what you can work out.

Simply quit claiming your interest to HER won't help you with the foreclosure problem or get you off the mortgage. It would make the partition suit moot though, at the cost of giving up any leverage you have with her on this.

Be careful to ensure that the debt cancellation won't cause you tax problems though. Cancellation of debt is taxable income unless you meet one of several conditions. See IRS Publication 4681 for details about that.

 

[LdiJ]

What is the name of your state? Iowa

So I co-own a house with a woman who took off on me last year. We're both on the deed and mortgage. She chose to sue me for partition a few months ago. There's hardly any equity in the house and I don't see the purpose in fighting over the breadcrumbs.

The problem is that it will go into foreclosure very soon. Is it possible for me to sign a quitclaim deed in lieu of foreclosure? And will this effectively end the partition lawsuit? I have no interest in fighting ot out with her.

She chose to sue you for partition because she wants the house sold so the mortgage gets out of her name. She isn't interested in the breadcrumbs, she is interested in preserving her credit. Why aren't you selling the house rather than allowing it to go into foreclosure? If you are living there why aren't you paying the mortgage? A foreclosure does serious damage to both yours and her credit.

 

[kk1981]

She chose to sue you for partition because she wants the house sold so the mortgage gets out of her name. She isn't interested in the breadcrumbs, she is interested in preserving her credit. Why aren't you selling the house rather than allowing it to go into foreclosure? If you are living there why aren't you paying the mortgage? A foreclosure does serious damage to both yours and her credit.

She sue for partition after she ignored 2 months of me asking if we could list the house. She also asked the court to evict me so currently the house ig vacant. I owe her nothing. A lawyer I called advised I not pay the mortgage since I won't see any money back in equity.

So can I sign a quitclaim deed in lieu of foreclosure to keep the foreclosure off my credit and end the partition?

 

[Just Blue]

She sue for partition after she ignored 2 months of me asking if we could list the house. She also asked the court to evict me so currently the house ig vacant. I owe her nothing. A lawyer I called advised I not pay the mortgage since I won't see any money back in equity.

So can I sign a quitclaim deed in lieu of foreclosure to keep the foreclosure off my credit and end the partition?

Taxing Matters answered your question...TM is, by the way, a site vetted attorney.

 

[kk1981]

A deed in lieu of foreclosure is where you sign over the deed (a quit claim deed could be used) to the lender in order to avoid foreclosure. Ideally you want to negotiate with the lender that it will take the deed and forgive any balance due left after the lender sells it so that you at least don't end up owing any money out of it. The lender might not let you do it for your half without her joining in on deal. You'll need to talk to the lender to see what you can work out.

Simply quit claiming your interest to HER won't help you with the foreclosure problem or get you off the mortgage. It would make the partition suit moot though, at the cost of giving up any leverage you have with her on this.

Be careful to ensure that the debt cancellation won't cause you tax problems though. Cancellation of debt is taxable income unless you meet one of several conditions. See IRS Publication 4681 for details about that.

Thanks for your answer. I hadn't even thought of the tax implications. I'll see what I can do.

 

[LdiJ]

She sue for partition after she ignored 2 months of me asking if we could list the house. She also asked the court to evict me so currently the house ig vacant. I owe her nothing. A lawyer I called advised I not pay the mortgage since I won't see any money back in equity.

That was horrible advice for the attorney to give you. All that does is ruin your credit. I would recommend that you start paying again to save your credit, and then agree to sell the house as part of the partition case. You don't want the house auctioned off on the courthouse steps, because that may not bring in enough to cover the balance on the mortgage.

So can I sign a quitclaim deed in lieu of foreclosure to keep the foreclosure off my credit and end the partition?

IF the mortgage company agrees to accept a deed in lieu you can do that. However, again, as you were previously told, they are likely to require both of you to sign it.

 

[kk1981]

@Taxing Matters Yeah the bank needs her signature, too. Something about it being an FHA loan and having strict standards.

Would there be anything wrong with not contesting the partition or foreclosure?