Deed-in-Lieu Mortgage Times Two

Paul-

The other day we were talking about deed in lieu of foreclosure.  My client that has a property that has second was willing to do a deed lieu.  They approved the deed in lieu, but are still continuing with foreclosure proceedings.  You said that they could not do deed in lieu, because the second had to release the mortgage.  What if we requested a copy of the note from the second from the servicer, and they did not have it?  Would it give us leverage or time to be able to short sale the property?  

Thanks,
Kel

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Hi Kel,

If I remember this one correctly, the first and second are with the same lender and I suggested that there is a high likelihood that they may be owned by different investors even though they are serviced by the same company. 

If they’ve “approved the deed in lieu” and you’ve confirmed that then you’ve spoken to a more reliable source than this person typing.  I was just emphasizing the point that the deed-in-lieu is normally reserved for properties that are secured by one mortgage; however, this is by no means an absolute.  If the first mortgage is an FHA loan, for example, the Dept. of HUD permits $2,000 to discharge a junior lien.

In any regard, lenders would rather accept a short sale than to take the property back through a deed-in-lieu, so get your short sale submitted!

All lenders have copies of the notes; it’s the original notes that seem to go missing.  In Florida, the time to raise that issue is as a motion to dismiss once the homeowner has been served with the foreclosure complaint. 

Thanks for the questions and hope this helps.

Paul