Monica’s Deed in Lieu

We have just completed a deed in lieu.

In the “agreement” it has a checkmark next to “full satisfaction” and not “partial satisfaction” of loan.

Under “Value of Property” heading it reads:
Borrower and Lender hereby agree that as of the date of this agreement, the fair market value of the property is estimated at approx the amount owed to the lender, and said value shall be used in all closing and settlement statements for the conveyance of the property to lender.”

We had no HUD statement, we had no closing docs other than the deed and misc filings that ever had an actual amount. How do I know how much was forgiven? Is it silly for to think that they did a straight across trade – our house for full satisfacation and we will not get a 1099 or deficiency judgement in the future?

We have just received a “Release and Satisfaction of Mortgage” filed with the beuearu of conveyances from MERS that boilerplates the “full payment and satisfaction”.

I have the feeling that this is just a document that allows them to get free title and doesn’t actually mean we have been “released” of payment and/or forgiven debt and/or deficiency judgement? Am I correct on this?

This was a deed in lieu, not a shortsale or foreclosure – do I still need to worry about what they sold the house for? Will that decide a figure for me?

What in the world am I really looking for in the way of documents that lets me know where I stand with forgiven debt or deficiency judgement? What are the magical words you want to see in this case?

Lot’s of questions… sorry… I can’t seem to find an answer from anyone… including a 300.00 per hour “real estate” attorney who started taking notes from ME! Ugh.

Thank you for your help…

Monica

———–

Hi Monica,

It looks to me like you won’t receive a 1099 and won’t be pursued for a deficiency.  Additionally, the balance on the credit report should be zero. 

A DIL generates a 1099-A for the difference between the principal balance on the loan less the value of the property at time of conveyance.  Since the agreement states ‘the fair market value of the property is estimated at approx the amount owed to the lender’, then yes it was a straight trade.

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.