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A deed in lieu of foreclosure is exactly what the name implies. It is a process that occurs in lieu of foreclosure. After the processes have ended, a full foreclosure should not be reflected on an individual’s credit history.

The mortgage account should reflect a deed in lieu, which is better than a full blown foreclosure, but not by much. Anything helps, however, when an individual is attempting to rebuild credit.

Natalia Osorio Editor of the “Loan Modification Foreclosure” website — http://www.LoanModificationForeclosures.com — pointed out;

“…Choosing a deed in lieu of foreclosure should be done only as a last resort to stop foreclosure. To do this, you voluntarily return the property to the lien holder. This does not save your home, and does not save your credit. However, a deed in lieu of foreclosure does less overall damage to your credit than a foreclosure, albeit by a very small step. This is a last resort for individuals who are for some reason unable to refinance or sell, and who do not qualify for a repayment or mitigation plan…”

Another major benefit to a deed in lieu is that it provides final closure and does not allow for deficiency judgments after foreclosure. After the long, rigorous process of foreclosure and losing the house, weary homeowners are often sued by the mortgage holder for the amount they still owe on the loan after the proceeds from the sheriff’s sale are deducted. Banks are also at liberty to increase the amount due with tens of thousands of dollars in fees. With the current economy, most properties have declined in value and are unlikely to fetch the balance due on the loan when sold at auction.

A deed in lieu stops the foreclosure process immediately. This provides relief for a tired homeowner who has decided it is no longer worth his or her time and effort to fight the bank in an attempt to retain the property. When a person has no option that does not include losing the home, ending the foreclosure process becomes the next priority.

“…Individuals who wish to quickly move on after this failed financial investment can help themselves by opting for a deed in lieu. A long string of late mortgage payments does more damage to a homeowner’s credit. Every month a payment is late it is reported to the credit bureaus. A homeowner can begin establishing credit again quickly after a deed in lieu transaction–without the terrible burden of a foreclosure hanging over their heads…” N. Osorio added.

Further information about how to get professional assistance with a mortgage loan modification by http://www.LoanModificationForeclosures.com

Hector Milla runs his corporate website at http://www.OpsRegs.com where you can see all his articles and press releases.

Article Source:http://www.articlesbase.com/mortgage-articles/can-a-deed-in-lieu-of-foreclosure-be-shown-as-foreclosed-on-a-credit-report-1757198.html

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Foreclosure is actually a good money making business in the world of real estate. Investors are making millions off foreclosure properties. Unfortunately they are thriving off individuals who are losing their homes. Below is a brief guide on foreclosure by power of sale 101.

Generally, a person can loan some amount against his property to a bank or other lending institution. The higher the market value of the property, the higher the loan amount will be. As soon as the contract is sealed, the mortgage loan is issued. This gives the lender the right to foreclose on the property if the money is not paid according to the loan terms. Foreclosures can be judicial or by a trustee sale invoked upon a power of sale clause in the loan’s deed of trust.

What is a Judicial Foreclosure?

The proceedings of judicial foreclosure are supervised by the court within the presence of all involved parties and lawyers. This ensures that the judiciary system and all issues are dealt with properly and according to the law.

What is Foreclosure by Power of Sale?

A lender does not need the supervision of the courts to initiate a foreclosure by power of sale. Lenders often prefer power of sale foreclosure proceedings because they tend to be faster and less expensive. The proceeds from the sale of the property will first go to the mortgage holder (lender or bank), then if there is anything left over the lien holders and borrower will receive it.

Advantages and Disadvantages of Power of Sale Foreclosure

• If there are title problems with the property such as actual deed defects or liens and lessees, a power of sale foreclosure can only be resolved judicially.
• Deficiency judgments are prohibited in most jurisdictions. This means that the mortgage holder cannot sue the borrower for a deficiency judgment.
• Foreclosure by power of sale must already be specified in the mortgage contract in order for it to take place.
• A mortgage in the form of an absolute deed prevents foreclosure by power of sale.

Foreclosure by Power of Sale is Mandated by:

Deed of Trust

The majority of jurisdictions prohibit a foreclosure by the power of sale without a deed of trust present. This entity is the third party or known as the trustee. The trustee is entrusted by the lender to hold the mortgaged property and mandated by the lender to act on the foreclosure without any questions.

The trustee will take charge of the foreclosure proceedings, and the deed of trust will allow the mortgage holder to bid on the foreclosed property during the auction, provided that both parties are not closely associated. If they are, the mortgage holder/lender is forbidden to bid.

Power of Sale Constitutional Issues

Although this procedure has been controversial, for the best interest of all parties involved the lender is still required to post a Notice of Sale advertisement in the local newspaper within the jurisdiction that the property is located.

The Fourteenth Amendment of the U.S. Constitution mandates the notice of sale and hearing requirement. However this issue has been met with much controversy and there doesn’t't seem to be a specific answer yet. So far it seems that a public notice of sale is required for judicial foreclosures, but not for non-judicial foreclosures.

Learn more about Power of Sale Foreclosure and Get your Free Do It Yourself Loan Modification Kit. This loan modification kit includes everything to Stop Foreclosure and Save Your Home with a loan modification. Includes Loan Modification Worksheets, Loan Modification Forms, Detailed Step-by Step instructions, lender Rolodex, foreclosure timelines, over 50 bank specific forms And Much More! Absolutely Free!

Visit our website for How to articles, mortgage calculators, free sample hardship letters, foreclosure timelines, and dozens of informative articles on loan modifications and foreclosure. Stop by to check out our growing library of free financial kits. We currently have bankruptcy kits, credit repair, mortgage forms, and loan modification with more on their way!

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Article Source:http://www.articlesbase.com/mortgage-articles/what-you-need-to-know-about-foreclosure-by-power-of-sale-1533710.html

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