When the borrower misses two or three monthly installments of the mortgage loan, she might lose the mortgaged house in the hands of money lenders. It is a hard for a homeowner to surrender her house. Having to face the inevitability of moving out can break the heart of an owner.
When going through the process of alteration or foreclosure people usually do all the wrong things and end up paying out more than they should or lose their home because they fought improperly.
Surrendering a house is usually done with a deed in lieu of foreclosure, and is done before the house is sold at sheriff sale. Homeowners can call their lender to offer the deed in lieu of foreclosure, and the bank will evaluate whether to accept or not.
A deed in lieu will be slightly better on the homeowners’ credit, because they did at least something to avoid the entire foreclosure process, even if it was merely giving the property back and admitting that they could not afford the mortgage any longer.
This option will allow the lender to avoid a costly legal battle and will give the foreclosure victims a slightly less negative mark on their credit, though, as it shows they worked with the bank to transfer the property and give the collateral back instead of facing foreclosure.
Surrendering a home does not affect the foreclosure process or its negative consequences. A deed in lieu can effectively surrender a house to the bank. This makes offering the bank a deed in lieu of foreclosure a much wiser decision for the long-term financial health of the foreclosure victims.
Rather than leaving the house before the foreclosure process is over, homeowners can stay until the transfer is completed, using the time to get out of debt, save up an emergency fund, or otherwise improve their financial situation.
Once the deed is transferred to the bank, the homeowners will then be free to move out of the house, having found a solution to stop foreclosure and avoid the more devastating effects of the foreclosure process.
Surrendering the house through a deed in lieu of foreclosure will have much the same end results in terms of allowing the homeowners to move out and move on with their lives, but they will also be able to preserve a small amount of their credit history as well.