Deed in Lieu of... - Posted by Michael

Posted by Ernest Tew on May 28, 2000 at 10:10:47:

In the states that I’m familiar with, “a deed in lieu of foreclosure” pertains to real estate. Under most states, a mobile home is deemed to be a vehicle and therefore treated as perosnal property. It could be repossessed" and not foreclosed on.

Essentially, your lender was saying that they would not accept the home in return for satisfing your debt obligation. Apparently, you signed the loan which obligated you to pay. That is, you became personally liable, even if you decide to abandon the home.

If you do abandon the home, or the lender repossesses it, your credit will be damaged. When you have bad credit, it becomes more difficult to obtain loans. Even with bad credit, some lenders will still make loans to you. However, they usually demand a larger cash down payment and a much higher interest rate. As a result, people with bad credit pay higher prices than those who maintain good credit. For example, a lender may charge 10% interest to a customer with good credit and 14% to a customer with bad credit. It appears that the difference is only 4%. But, the customer with bad credit is actually paying 40% more than the customer with good credit.

I’m giving you this explanation to try to emhasize the importance of maintaining good credit.

Now, what can you do to get out of the obligation and maintain good credit? Try advertising the home for sale with “Nothing Down For Qualified Buyer.” Qualified buyer means someone with good credit. If possible, get them to pay a couple of months in advance or anything else you can do to show good faith.

As an alternative, you might enter into a net lease with an option to buy. That is, you rent the home with your tenant having the right to buy. They pay you and you continue to pay the lender. Be sure to talk to the park manager and get their approval before commiting yourself to a transaction of this nature. You might even convince the park manager to rent or sell the home for you in order to keep it in the park. You could offer to pay them a fee or share any rental income in return for them handling it for you.

On occasion, I have even had people pay us to take homes off their hands when they were moving and needed to get off the hook for payments.

Deed in Lieu of… - Posted by Michael

Posted by Michael on May 28, 2000 at 24:54:57:

I have a '99 manufactured home that I must sell due to a job transfer out of state. House is worth about what is due on the mortage, and in good condition. Has been on market for 3 months with no nibbles. I must sell in order to start new job and have tried all marketing approaches for the house (including a short (reduced price) sale). Does anyone know of any other options besides a Deed in Lieu of Foreclosure? (my lender says they will not accept such a deed- they would just foreclose).