Deed in lieu of foreclosure:

Deed in lieu of foreclosure is one of the last options that you can take to avoid foreclosure. Deed in lieu of foreclosure is a type of deed that a borrower signs it to the lender to pay off a loan which is already in default and also to avoid foreclosure proceedings. Now the defaulted borrower cannot sign a Deed in lieu of foreclosure to the lender without the lender’s consent. The lender also must accept the Deed in lieu of foreclosure.

A Deed in lieu of foreclosure offers many advantages to both the lender and the borrower. The lender can save lots of money; which he might have to spend for the foreclosure proceeding; if the borrower is ready to sign the Deed in lieu of foreclosure. The borrower can also avoid the harassment and also the deficiency judgment. As soon as the lender accepts the Deed in lieu of foreclosure, the borrower is free from all his liabilities. But the borrower may have to pay tax on the forgiven debt.

A Deed in lieu of foreclosure will have a huge negative affect on your credit report and you may not be able to get a loan in coming 5 to 7 years. The credit affects of Deed in lieu of foreclosure is similar to foreclosure. Your credit score will be dropped by 250 to 300 points and it will be shown on your credit report for 7 to 10 years. So the borrowers choose this option as their last resort to avoid foreclosure.

A deed is essentially a piece of paper. The deed transfers interest in land from one person to another. The person who is getting the property is called the grantee and the person who is signing to the property to the grantee is called the grantor. It’s a real estate contract. Legally, it must be signed by the grantor.

Quit claim deed is one type of deed .There are also another deed which is warranty deed. Warranty deeds are two types 1) special warranty deed 2) general warranty deed. The quitclaim deed transfers whatever interest the grantor has in the property to the grantee.

There is an important limitation to the quitclaim deed. Because it transfers the rights to the grantor, but it does not guarantee that the property is the grantee’s outright. . If there are several owners of the property and if others with an interest in the property do not sign the deed, then their rights will be unaffected by this document — they still retain their ownership. The signed quitclaim deed is a simple way to give up all interest in a property.

Quit claim deed is generally used to transfer property within family members and friends. This type of deed is widely used at the time of divorce too. Once spouse can easily transfer his or her share of property to the other spouse with the help of a quitclaim deed.