Legal Question in Real Estate Law in California

Re: Foreclosure or Deed in Lieu Of

Please contact our office as there are other ways to get through this without the Deed in Lieu Of or a foreclosure, especially since you haven't received the Notice of Default. It also sounds like you are not delinquent on paying. We would be happy to talk with you at no charge.

Re: Foreclosure or Deed in Lieu Of

A deed in lieu is a surrender of the collateral to the lender; you can't give, sell, transfer or trade the same house to two different parties, so if tis can be done at all, I would think it would require coordination between the lenders. I can't say this has never happened, but it sounds unlikely but perhaps not impossible to me that a deal could be worked out. I'd start by asking for a meeting with an officer at Countrywide, and if you can't make any headway, then try the 2nd lender, WAMU.

Another outside possibility is that WAMU would take a deed in lieu, eliminating them as a creditor; they would take title subject to the 1st, probably an unattractive proposition for them, but it may depend on the actual numbers. There is an advantage to eliminating the 2nd because if the holder of a 1st forecloses, the 2nd's collateral is wiped out and it can sue you directly because it is then reduced to the status of an unsecured creditor.

In comparison, a secured creditor on a residential loan must look first to the collateral, and in most cases cannot go after the borrower for a deficiency. The only situation in which a secured residential lender can go for a deficiancy after foreclosure is when (1) the foreclosure was in court rather than by trustee's sale, and (2) the loan in question was not for purchase money, i.e., it was a refinance loan.

I think both lenders have credit counselors who may be able to fill you in on their policies and can initiate deed-in-lieu negotiations, but obviously they are going to be very busy these days, and also will tend to give answers that are biased in favor of protecting their own interests. Nevertheless, this is an information source not to be overlooked, especially at an early stage before the Notice of Default is served and recorded.

Re: Foreclosure or Deed in Lieu Of

You are asking several questions at the same time.

Once your home is foreclosed, a creditor is coming after you. For instance, if Countrywide forecloses, WM will not go away and tell you "thanks" for the business.

Since Mr. Whipple has covered the answer here thoroughly and competently, I have nothing to add to his answer, except to urge you to follow his advice as quickly as possible, and, if you do not feel competent to do it yourself, retain a local real estate attorney for help.

The fact that you previously qualified for these type of loans, indicates that you have a major interest in rescuing your financial situation as soon as possible.

Good luck!

Re: Foreclosure or Deed in Lieu Of

Rarely will lenders accept a deed in lieu of foreclosure because you, as borrower, have a one year right of redemption and the bank could not market the home because they could not get title insurance. Also, people who can't pay on their loans often can't pay other debts too, and when a lender accepts a deed in lieu, they get the property with all other liens, etc.attached to the title and they do not want that. It is simply faster and cheaper to do a trustee's sale. With respect to potential deficiency, if either of the lenders is not a purchase money loan (i.e., created at the time you purchased the proeprty) they COULD bring suit for judicial foreclosure and get a deficiency judgment for any unpaid portion of their debt.