Deed For Lease – The Newest Foreclosure Option
As our nation struggles to find effective solutions to end the foreclosure crisis, new foreclosure options have emerged including the Deed for Lease which allows homeowners facing foreclosure to stay in their homes for up to three years by becoming renters rather than owners. 10 Options to Stop Foreclosure
Closely related to the Deed in Lieu of Foreclosure, the Deed for Lease (also “Mortgage to Lease”) involves transferring title to the bank in exchange for waiving the remaining loan balance and entering into a rental agreement for your home at or below current rental market rates.
The Deed for Lease foreclosure option has many advantages such as completely Avoiding Deficiency Judgments, the stability of staying in your home for 3 more years for less than you paid as an owner and eliminating the costs of property taxes and homeowners insurance. Despite these obvious benefits, however, very few lenders actually offer this foreclosure option although more are likely to participate in the future. Read About the Recent Nationwide Foreclosure Settlement
Fannie Mae is one of the few lenders currently offering Deed for Lease options so if your loan is owned by Fannie Mae contact them directly to see if you qualify for their program. In addition, Bank of America has recently launched a pilot program in Arizona, Nevada and New York to find out if conversion from home ownership to rental garners enough support to expand the program. Although less than 1000 homeowners will participate, you may be eligible if you are a Bank of America customer, your loan payments are at least 60 days past due and you have an underwater mortgage. More on Underwater Mortgages
Regardless of who actually owns your loan, you can always propose a Deed for Lease arrangement with your lender. First be sure to find out Who Owns Your Mortgage and then modify our Sample Deed in Lieu Cover Letterand Deed in Lieu Hardship Letter and be persistent. If the plan doesn’t work with your current lender, you may be able to find a new lender interested in the arrangement.