Foreclosure Defense

Deed in Lieu of Foreclosure Attorney in Tampa Florida

Many Florida residents have opted for a deed in lieu of foreclosure instead of modifying their loan or doing a short sale of their property. A Deed in lieu of foreclosure is a deed instrument in which a borrower conveys all interest in their property to the lender to satisfy a loan that is in default and avoid foreclosure proceedings.

The principal advantage to the borrower is that it immediately releases him/her from most or all of the personal indebtedness associated with the defaulted loan. It also avoids the long and protracted process of going through foreclosure which often increases the amount of the deficiency due to attorneys fees incurred by the lender to prosecute the foreclosure.

Just as in a short sale or loan modification, the lender must agree to a deed in lieu of foreclosure. If the lender agrees to accept a deed in lieu, the borrower will need to sign an Agreement with the lender to transfer all interest in the property in lieu of foreclosure as well as a deed for the property deeding it over to the lender. Once the Agreement is signed and the deed is executed, the lender will then mark the Note that secures the Mortgage as being paid. The lender will then provide the borrower with documentation that the mortgage debt is canceled and also waives the right of the lender to seek a deficiency balance of the difference between the original balance then due on the note and the amount the lender receives when the property is eventually sold.

The executed paid Note, Agreement for deed in lieu, and warranty deed are then sent to a Title & Escrow company to process the transaction and record the deed transferring the legal interest in the property back to the lender. Once the transaction is consummated, the paid Note is then sent to the borrower releasing them from financial responsibility of the Note and Mortgage.

A deed in lieu can have several tax consequences that homeowners must be aware of. Whenever a debt is forgiven, the resulting forgiveness can be counted as income by the IRS. Thanks to the Mortgage Forgiveness Debt Relief Act, any debt forgiven between 2007 and 2012 on a borrowers principle residence may not be counted as income by the IRS if certain conditions apply. As previously stated, it must be the borrower’s principle residence so investment or second homes or rental properties will not be eligible for forgiveness. The IRS’s rules for a principle residence dictate that the borrower must own and occupy the property for two years or 730 days but it does not need to be concurrent. Any absence of over one year will not be counted as occupancy. Additionally, the Act limits the amount of forgiveness to two million dollars. If the debt forgiven on a refinance of a property, then only the original balance of the mortgage that was refinanced will be considered for forgiveness. Any excess or “cash out” will not be eligible for forgiveness under the Act. In order for the debt not to be considered as income, the borrower must report the debt on IRS form 982 and included with their tax return. The Florida Consumer Law Center, P.A. is not a tax professional so do not consider this tax advice. Please see a tax professional for guidance on tax consequences of a deed in lieu or short sale.

As with any situation where a borrower is not fulfilling their obligations for repayment of a mortgage, a Deed in Lieu will have adverse ramifications to their credit rating. However, it will prevent a foreclosure from appearing on their credit and which some believe will have a greater negative impact on a borrower’s credit. After seven years, the Deed in Lieu can be requested to be removed from the credit score and the bureaus must comply and remove it from the credit report.

The borrower may begin to rebuild their credit immediately after the Deed in Lieu is executed and completed. The Florida Consumer Law Center, P.A. also offers credit repair and information on how to rebuild your credit. Click here for information on the services we provide for credit repair and rebuilding. 

 

Free Consultation

Call us today at 1-888-403-5529 or submit this form

*Name:

*Phone Number:

*Email:

*Details of Your Case:

*How Did You Hear About Us:

Other:

Florida Consumer Law Center, P.A.
5201 W Kennedy Blvd, Suite 220
Tampa, FL 33609

Florida Web Site Designers

Material presented on the Florida Consumer Law Center, P.A. website is intended for information purposes only. It is not intended as professional advice and should not be construed as such.

The material presented on this site is included with the understanding and agreement that Florida Consumer Law Center, P.A. is not engaged in rendering legal or other professional services by posting said material. The services of a competent professional should be sought if legal or other specific expert assistance is required.

Any unauthorized use of material contained herein is at the user’s own risk. Transmission of the information and material herein is not intended to create, and receipt does not constitute, an agreement to create an attorney-client relationship with Florida Consumer Law Center, P.A. or any member thereof.

This website is not intended to be advertising and Florida Consumer Law Center, P.A. does not wish to represent anyone desiring representation based upon viewing this website in any state or jurisdiction where this website fails to comply with all laws and ethical rules.

This website is not intended to constitute legal advice or the provision of legal services. By posting and/or maintaining this website and its contents, Florida Consumer Law Center, P.A. does not intend to solicit legal business from clients located in states or jurisdictions where Florida Consumer Law Center, P.A. or its individual attorneys are not licensed or authorized to practice law.

Some links within this website may lead to other sites. Florida Consumer Law Center, P.A.does not necessarily sponsor, endorse or otherwise approve of the materials appearing in such sites.