DEED-IN-LIEU: Freddie’s Plan to Help Jump Start the Residential Real Estate Market

DEED-IN-LIEU: Freddie’s Plan to Help Jump Start the Residential Real Estate Market

The Federal Housing Finance Agency, will be implementing new procedures to help with the ongoing housing crisis.  Planning on increasing servicers incentives for completing a deed-in-lieu of foreclosure, they have created a Single-Family Seller Servicer Guide.

Beginning in March 2013, Freddie Mac and Fannie Mae will start permitting homeowners with underwater mortgages to walk away from their homes and cancel any outstanding debt by way of a deed-in-lieu of foreclosure.

deed in lieu property guidingEvery Borrower, regardless of delinquency status, is eligible to be considered for a deed-in-lieu, provided that the following are met:

  • A deed-in-lieu can only be offered to a distressed homeowner AFTER a home retention option and a short sale option are both analyzed first.
  • There must be a hardship, ie. death, divorce, disability, distant employment, reduction in income.
  • Borrower must be able to covey clear and marketable title.
  • If the mortgage is current or less than 31 days delinquent, then the following additional requirements must be met:
    • At least one of the borrowers must occupy the premises as their primary residence and;
    • The monthly debt payment-to-income ratio must be greater than 55%

Unless otherwise notified by Freddie Mac, all Servicers are permitted to approve a deed-in-lieu that meets certain requirements for the following eligible Borrowers:

  • Borrowers are 90 days or more delinquent
  • Borrowers who are current or less than 90 days delinquent provided the borrower’s eligible hardship is one of the following:
    • Death of a Borrower or death of the primary or secondary wage earner
    • Long-term or permanent disability; serious illness of a Borrower/co-Borrower or dependent family member

This is one of many programs in place to assist you if you’re underwater or falling behind on your mortgage payments. As you can see from the hierarchy of relief above, a short sale is one of the first things you should consider when your finances start to get tight or you start to fall behind on your mortgage payments.

If you are contemplating a deed-in-lieu, short sale, or facing a foreclosure, you should speak to a licensed Florida Attorney to discuss your options. If I can be of any assistance, feel free to send me an email at GuirguisLaw@gmail.com.

This is a generalized discussion, is not intended for any particular set of facts, and should not be relied upon as such. By no means does this blog create an attorney-client relationship or attorney-client privilege between the attorney and the readers. The law frequently changes as new cases are decided and published regularly. Anything relied upon in this or any blog, is done so at the readers own risk.

VERNON W. GUIRGUIS, ESQ.
The Guirguis Law Firm, PLLC
1423 S.E. 16th Place, STE 204
Cape Coral, Florida 33990
239.573.9939 Telephone
239.603.6965 Facsimile

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Posted on February 6, 2013, in Legal and tagged , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. 1 Comment.

  1. You seem to know a lot about this, like you wrote the guide in it or something. This is excellent blog. An excellent read. I will definitely be back.

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