Florida Foreclosure Lawyer

WASHINGTON – Citigroup Inc. plans to let homeowners on the verge of foreclosure stay in their homes for six months — if they turn over the deed to their property.

Citi said Thursday it is launching the pilot program, dubbed “Foreclosure Alternatives,” this week in Texas, Florida, Illinois, Michigan, New Jersey and Ohio. Initially, about 1,000 homeowners are expected to participate. Citi may expand the program nationwide.

In a normal foreclosure, a lender assumes legal control of the property and evicts the homeowner. But Citi’s program, like other “deed in lieu of foreclosure” efforts, allows the homeowner to avoid a completed foreclosure. While the owner must still leave the home after six months, the program results in a less severe hit to the borrower’s credit score.

The policy is an attempt to deal with what lenders see as a growing phenomenon: borrowers who choose to default on their mortgages. Close to one in every three U.S. homeowners owe more on their mortgages than their homes are worth, according to Moody’s Economy.com.

Many housing analysts say these borrowers — particularly those who owe at least 20 percent more than their home’s current value — are choosing to walk away because they see little chance that home prices will come back.

Also, many states have lengthened the time it takes to complete a foreclosure, making the process more time-consuming and expensive for the lending industry.

“Why should we all go through the foreclosure process and evict people?” said Sanjiv Das, Citi’s top mortgage executive. Avoiding foreclosure, Das said, is “less painful for our borrowers as well as for us.”

Borrowers in Citi’s program will still need to pay their utility bills. But Citi will pay at least $1,000 in relocation costs and will consider helping out with other expenses. Citi also plans to provide relocation counseling.

The program is intended to help borrowers who don’t qualify for a mortgage modification or a short sale — one in which the lender agrees to sell a home for less than the total mortgage amount.

Citi’s policy is similar to one announced in November by Fannie Mae, the government-controlled mortgage finance company. Fannie is allowing homeowners to hand back the deed to their properties, then rent them back at market rates.

This is just another example of how the big banks who received a tax-payer bailout are not doing anything to deal with the foreclosure crisis.

What everyone needs to know is that with valid defenses most homeowners can stay in the home mortgage free for a year or two!

If a distressed homeowner choses to accept Citi’s offer then you also must insist that they sign a waiver of deficiency. You see after you walk away from your home and give up any and all defenses you may have to the foreclosure, the bank can still come after you for what you owe on your mortgage. That’s right, you just saved the bank the time, money and effort of foreclosing on your property, only to be sued for a deficiency judgment!

Once again if you want to give up your property and not fight the foreclosure that is your right, but if you do then insist on a signed waiver of deficiency. If Citi refuses to do this then drag out this process as long as you can, while living rent-mortgage free. They may also tell you that they never sign a waiver of deficiency but it is also not in their practice to go after defiency judgments. Don’t believe them. If they don’t sign, you don’t leave! Always seek the counsel of an experienced foreclosure defense attorney.

Posted By George Beckus Esq.
The Golik Law Firm
904-448-5335

Foreclosure is not the only way to help save your finances. While there are numerous options available to homeowners, sometimes the best solution is to give up the property and get a fresh start. In these cases, a deed in lieu of foreclosure can be a much more viable option.
With a deed in lieu, you are handing over the deed to your property instead of going through the foreclosure process. This means you will no longer own the home at all and will no longer be responsible for the mortgage payments.

The deed in lieu process has to be completely voluntary on the part of both the homeowner and the lender. Many lenders require the owners to write/sign a statement indicating they are participating in this procedure voluntarily.

Why would you even want to consider this option? The primary reason is that once the process is completed, you are completely released from any debt associated with that particular loan. You will not have any mortgage payments or back payments hanging over your head.

Also, deed in lieu is not a foreclosure so there’s not the same negative connotation associated with foreclosing on a loan. Even your credit does not suffer nearly as much with this procedure as it does with actual foreclosure.

You may even get much better terms through the deed in lieu than you would with foreclosure. Many people aren’t aware that when they foreclose on the house, they could still be held responsible for any liens or other mortgages. You do not have that issue with the deed in lieu of foreclosure.

This is also better for the lender. Foreclosures are costly and can take quite a bit of time to be completely processed. During that time, some people will take advantage and will destroy the property. This means that the lender loses out on the full mortgage and also has to pay for repairs.

There are two primary forms associated with the deed in lieu of foreclosure: the Agreement in Lieu of Foreclosure, and a form of the deed.

The Agreement in Lieu of Foreclosure is the actual document which details the terms and conditions of the deed in lieu. It identifies exactly what is being transferred to the lender. This document will be signed by both parties involved.

The other document involved is the deed. The deed could be in the form of a Warranty deed, a quit claim deed, or a grant deed depending on your state and county. All of these versions are essentially the title to the property stating who actually owns the property. This form will ultimately go to the lender.

The homeowner will also get a form which officially says the mortgage debt is canceled. This proves that you no longer have to make any payments on the property, and the transfer of the deed shows that you no longer have any ownership interest in the house.

You will also receive some sort of waiver to the right of deficiency judgment. This is a vital piece of paper for the homeowner. This waiver means that the lender can not come back and try to get you to pay for any monetary difference if they have to sell the house for less than was owed.

After you have received your formal cancellation notice and the waiver of right of deficiency judgment, you might still be liable for taxes. This will depend entirely upon your state and the circumstances of the sale. It would be best to consult with a tax professional to find out all the details.

In some states, when a property changes hands the original owner is responsible for paying the deed tax. This tax is figured by using the difference of the current market value of the home minus the mortgage balance and any liens on the property.

You probably will not have to pay income tax on the property to the US government though. Through the end of 2009, the Mortgage Debt Forgiveness Tax Relief Act states that property changes through deeds in lieu of foreclosure do not have to pay federal income tax.

However, there are a few stipulations to this act. The home must have been your main residence for at least 730 days. This time doesn’t have to be concurrent. The deed in lieu has to have been processed between 2007 and 2009. The debt relief cannot equal more than $2 million. The forgiven debt money has to be used either on that property or for paying off other debts — you cannot simply pocket any money gained from this process.

Yes, facing the loss of your home can be emotionally stressful, but it does not have to completely ruin your financial future. By utilizing alternative methods such as the deed in lieu, you can come out much better than with a foreclosure.

Posted By George Beckus Esq
The Golik Law Firm
904-448-5335