What is 'Deed in Lieu Of Foreclosure'?

A Deed in Lieu of Foreclosure is a deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.

The deed in lieu of foreclosure offers several advantages to both the borrower and the lender.

The principal advantage to the borrower is that it immediately releases him/her from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he/she would in a formal foreclosure. Another benefit to the borrower is that it hurts their credit less than a foreclosure does. Advantages to a lender include a reduction in the time and cost of a repossession, lower risk of borrower revenge (metal theft and vandalism of the property before sheriff eviction), and additional advantages if the borrower subsequently files for bankruptcy.

In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred. Both sides must enter into the transaction voluntarily and in good faith. The settlement agreement must have total consideration that is at least equal to the fair market value of the property being conveyed. Sometimes, the lender will not proceed with a deed in lieu of foreclosure if the outstanding indebtedness of the borrower exceeds the current fair value of the property. Other times, lenders will agree since they will end up with the property anyway and the foreclosure process is costly to the lender.

Because of the requirement that the instrument be voluntary, lenders will often not act upon a deed in lieu of foreclosure unless they receive a written offer of such a conveyance from the borrower that specifically states that the offer to enter into negotiations is being made voluntarily. This will enact the parol evidence rule and protect the lender from a possible subsequent claim that the lender acted in bad faith or pressured the borrower into the settlement. Both sides may then proceed with settlement negotiations.

Neither the borrower nor the lender is obliged to proceed with the deed in lieu of foreclosure until a final agreement is reached.

**In New York, the Home Equity Theft Prevention Act has created some confusion regarding this frequently-used method of settlement. It is unclear whether HETPA applies to deeds in lieu of foreclosure since there is no clear exclusion as there is for a referee's deed, for example. The 2-year right of recission is not a risk that banks or title insurers are comfortable with, especially given the complexities of compliance, so many banks and title insurers in New York are not willing to work with deeds in lieu.

taken from Wikipedia

Let's Talk about Roofs

Most shingle roofs are only built to last about 20 years. Granted, nowadays, you can find 30-year shingles but odds are your roof does not have them unless it was recently re-done. Roof replacement, next to termite control, is one of the most costly expenses in home maintenance. If you can avoid having to re-tile the roof, then do so by simply buying a home that doesn’t require a new roof for a very long while. 

Causes of Roof Damage

In the South they don’t get many snowstorms, but do on occasion have ice storms. Damage can occur from falling debris, ice jams that clog the gutters and heave the shingles off the edges of the roof. If gutters are not cleaned yearly, leaves and debris can also accumulate and cause damage to the roof. Wind can cause damage if there were already loose vents, shingles, or parts of the ridge. These can be torn away exposing parts of the roof and causing leaks. A leak itself does not indicate the total replacement of a roof, but once moisture gets in the house, the damage can escalate quickly. Mold can grow and water will find it’s way down the walls or wherever it finds a low point. If you see pieces of metal or shingles in your yard after a rainstorm or wind event, look up. Your roof may be compromised. 

Single Layer of Shingles

You want to have a roof that is going to last as long as the warranties on the materials state, then have the workers remove all the old shingles and felt and replace with new material. You can have a choice of 20, 25, and 30-year shingles. Using the 30-year shingles gives the roof architectural depth whereas 20 year shingles typically lie flat providing little variation. 

Double Layer of Shingles

Some contractors will recommend a cheaper way of re-installing the roof. They will simply re-tile over the existing roof. This is called a double layer of shingles and some businesses use it routinely because of the major cost savings. However, there are several drawbacks to this method. The double layer will:

1. Trap more heat in your attic space due to the added insulation. 

2. Be subject to deterioration if not done properly and might not last the full 20 years, 

3. Can look funny and affect your curb appeal if done improperly. 

4. Might affect sales value if a new owner thinks they will have to replace a double layer instead of a single one.

5. Could end up needing replacement again which subsequently will be much higher to remove a double-layer. 

More and more contractors are not even mentioning the double layered option because by doing them they find they have to come back more often to fulfill repairs after the job is supposedly completed. Also, should you inadvertently hire someone who is not reputable, you could end up replacing the entire roof again! For the removal of a double layer of shingles, the cost of roof replacement is staggering as compared to a single layer and most local laws now prohibit adding a third layer. 

What To Look For In A Roofing Contract

Obviously, your roofing contractor should have experience. They should offer a warranty on their workmanship, and they should hold insurance for their workers. Should anyone get hurt on the job, his or her insurance should pay for it, and not yours. Things that should be a normal part of the job are:

Nail pickup with magnets,

vent casings either stripped and repainted or replaced, 

ridge vent replaced, 

felting replaced, and

disposal of shingles and other waste. 

Get several bids for your roof. Bids fluctuate quite drastically. Some of this is either due to inexperience of the contractor or not including waste removal. Make sure you understand what the contractor is agreeing to do for the price set. Realize that many times contractor’s timetables are determined by their clients and not by the calendar. Also, any days that are raining or overcast will be days they cannot work. Be patient but also be sure they are getting the work done. Finally, the best way to find a decent roofer is to ask your neighbors. If they recently got their roof done they can give you a word of mouth recommendation on their work, which is often better than relying on fancy marketing by the contractor.by Claire Moylan, Yahoo Community

Note from Carol: In order to have our roof last longer, we had 'roof over roof' or 2 layers of shingles. We thought we had saved money and felt 2 layers might add insulation as well. However, after the massive winds, losing some of the shingles, our roofer found that the heat damage and wind damage compromised the rest of the roof and it only had a 1/2 life of what it should have had because of our choice. When we had the new roof installed, a ridge vent was added to take away the heat from the attic. With the new materials of todays roof, the dimensional shingle and the ridge vent is a very definite improvement over the old roof!

Will the tax credit closing deadline be extended?

Will the tax credit closing deadline be extended?

Lead by Senate Majority Leader Harry Reid, an amendment to HR 4213, the "American Jobs and Closing Tax Loopholes Act of 2010" would give buyers until Sept. 30 to complete their purchases and qualify for tax credits of up to $8,000.

Unfortunately, the 57-41 vote in the Senate on June 24 rejected ending debate on the legislation, which would have sent the bill to a final vote. Democrats fell three votes short of the 60 required to crack a GOP filibuster, leaving the future of the bill unclear.

In an attempt to attract Republican votes, Senate Democrats cut billions from the bill. But the behemoth legislation, which would extend unemployment benefits for more than 200,000 people a week, has a projected cost of $100 billion and would have added roughly $33 billion to the deficit, an expenditure that Republicans say the U.S. can't afford.

-Posted by the Columbus Board of REALTORS®

What happens when an owner faces foreclosure on his house?

Few people think they will lose their home; they think they have more time.

Here's how it happens. Note: Timeline varies by state.

First month missed payment

– your lender will contact you by letter or phone. A housing counselor can help.

Second month missed payment

-your lender is likely to begin calling you to discuss why you have not made your payments. It is important that you take their phone calls. Talk to your lender and explain your situation and what you are trying to do to resolve it. At this time, you still may be able to make one payment to prevent yourself from falling three months behind. A housing counselor can help.

Third month missed payment after the third payment is missed,

you will receive a letter from your lender stating the amount you are delinquent, and that you have 30 days to bring your mortgage current. This is called a "Demand Letter" or "Notice to Accelerate." If you do not pay the specified amount or make some type of arrangements by the given date, the lender may begin foreclosure proceedings. They are unlikely to accept less than the total due without arrangements being made if you receive this letter. You still have time to work something out with your lender. A housing counselor can still help.

Fourth month missed payment

– now you are nearing the end of time allowed in your Demand or Notice to Accelerate Letter. When the 30 days ends, if you have not paid the full amount or worked our arrangements you will be referred to your lender's attorneys. You will incur all attorney fees as part of your delinquency. A housing counselor can still help you.

Sheriff's or Public Trustee's Sale

– the attorney will schedule a Sale. This is the actual day of foreclosure. You may be notified of the date by mail, a notice is taped to your door, and the sale may be advertised in a local paper. The time between the Demand or Notice to Accelerate Letter and the actual Sale varies by state. In some states it can be as quick as 2-3 months. This is not the move-out date, but the end is near. You have until the date of sale to make arrangements with your lender, or pay the total amount owed, including attorney fees.

Redemption Period –

after the sale date, you may enter a redemption period. You will be notified of your time frame on the same notice that your state uses for your Sheriff's or Public Trustee's Sale.

Important: Stay in contact with your lender, and get assistance as early as possible. All dates are estimated and vary according to your state and your mortgage company.

From the HUD Web site
http://portal.hud.gov/portal/page/portal/HUD/topics/
avoiding_foreclosure/fctimeline

Is it true I don't have to pay Capital Gains when I sell?

It is true in most cases (that you won't have to pay Capital Gains when you sell your home). When you sell your home, the capital gains on the sale are exempt from capital gains tax. Based on the Taxpayer Relief Act of 1997, if you are single, you will pay no capital gains tax on the first $250,000 you make when you sell your home. Married couples enjoy a $500,000 exemption. There are, however, some restrictions on this exemption.

In order for the sale to be exempt, the home must be considered a primary residency based on Internal Revenue Service (IRS) rules. These rules state that you must have occupied the residence for at least two of the last five years. If you buy a home and a dramatic rise in value causes you to sell it a year later, you would be required to pay capital gains tax on the gain. This rule does, however, allow you to convert a rental property into a primary residence because the two-year residency requirement does not need to be fulfilled in consecutive years. For example, suppose that you invest in a new condo. You live in it for the first year, rent the home for the next three years and, when the tenants move out, you move back in for another year. At the end of this five-year period, you will be able to sell your condo without having to pay capital gains tax.

The other major restriction is that you can only benefit from this exemption once every two years. Therefore, if you have two homes and lived in both for at least two of the last five years, you won't be able to sell both of them tax free.

This act has been beneficial for home owners because it has significantly changed the implications of home sales. Before the act, sellers had to roll the full value of a home sale into another home within two years in order to avoid paying capital gains tax. This, however, is no longer the case, and the proceeds of the sale can be used in any way the seller sees fit.-article from www.investopedia.com/