Guide to Deed in Lieu of Foreclosure Maryland
What is a Deed in Lieu of Foreclosure?
A deed in lieu of foreclosure in Maryland is an option for a person or family having trouble paying their mortgage on time. Instead of selling the property, considering a short sale, filing for bankruptcy, or officially filing for bankruptcy, a resident may decide to file for a deed in lieu of foreclosure in Maryland.
The option doesn’t always clear a person from all liabilities such as taxes and deficiency judgment, but the act can allow a person to walk away from their property and mortgage with minimal damage. The action of a deed in lieu of foreclosure in Maryland will undoubtedly put a dent in your credit, but it will cause much less damage than foreclosure.
The deed in lieu of foreclosure process in Maryland is a complicated and stressful process, so it’s often in a property owner’s best interest to hire a real estate attorney. An attorney can tell you what options work best for you, and they can help you negotiate with the lender as well.
Federal Laws for a Deed in Lieu of Foreclosure (DIL)
Many laws vary state by state, but some laws apply on a federal level as well. The U.S. Department of Housing and Urban Development (HUD) supplies federal laws, and some of these laws fall below:
1) If a mortgager has been approved for a deed in lieu of foreclosure in the state of Maryland or any other state, the individual only has 90 days to complete the process and transfer the title over to the lender from the time the action was approved.
2) Under the federal laws of HUD, a person may receive up to $2,000 for any junior liens or for vacating the property within the proper time period.
3) A mortgagee may change the course of action within a foreclosure and revert to the DIL process. The action is only changed upon great consideration and in accordance with the Quality Control Plan.
Steps Toward a Deed in lieu of Foreclosure in Maryland
There are many step s to finalizing a DIL in Maryland, and a real estate or foreclosure lawyer should normally help you throughout the entire process.
1) Drafting the Settlement Agreement- the DIL process should begin with the mortgagor making a written offer to the lender or mortgagee. It is important to note that this process should AND NEEDS TO be voluntary on the part of the mortgagor. If the process is found to be a result of pressure, fraud, duress, undue influence, or any similar action, the case will be set aside and the mortgager can recover the value of the property, the equity, and the profits from resale. The mortgagor can also seek punitive damages if it’s proven the act was initiated by undue pressure.
2) If the application is ethically sound, the process moves onto consideration and the mortgagee will often forgive all the underlying debt. If noted in the Settlement statement, a mortgagee cannot seek personal liability from the mortgagor.
