When a homeowner decides that it is no longer feasible to continue living in his or her home, foreclosure is not always inevitable. Instead, it may be time to consider other alternatives to foreclosure that allow homeowners to mitigate the problem of a burdensome home mortgage. An experienced and qualified debt collection defense attorney like Alberto Montefalcon may help reduce stress and uncertainty by providing valuable assistance throughout the entire loss mitigation process. This blog addresses some loss mitigation alternatives: short sales and deeds in lieu of foreclosure.

*Short Sale

For homes that are “underwater,” worth less than the total balance of a mortgage loan, a short sale may be a preferred alternative. A short sale occurs when a lender agrees to release a borrower from a mortgage in exchange for the proceeds from the home’s sale. Borrowers are in no way legally entitled to a short sale. The borrower and lender must negotiate the terms of a short sale.

*Deed In Lieu of Foreclosure

Another alternative is a deed-in-lieu of foreclosure (DIL). A deed in lieu of foreclosure when a lender agrees to accept a deed to the property “in lieu of foreclosing,” and, as a result, obtains title to the property. Before a lender accepts a deed in lieu of foreclosure, it will require that the house is listed for sale for some period of time.

In some cases involving DILs, the lender may require the homeowner to vacate the property, sometimes in return for cash. Similar to short sales and loan modifications, a homeowner must be approved by a lender for a deed-in-lieu foreclosure.

To learn more about loss mitigation options, contact the experienced Sacramento metropolitan area/Northern California attorneys at the Montefalcon Law Offices. Contact us online or schedule a free consultation at any of our three conveniently located offices. Telephone our downtown Sacramento office at (916) 444 0440, our south Sacramento office at (916) 399-9944, or our Concord office at (925) 222-5929.