Legal Question in Real Estate Law in Wisconsin

A deed in lieu of foreclosure is intended to end or avoid the foreclosure process by turning the borrower's title to the property back over to the mortgage lender. If the foreclosure has not yet started, this could have the advantage of preventing a lawsuit against you from reported in the Wisconsin court system's public access database. If your credit is still relatively good, it could also slightly improve your credit report, depending upon exactly how the bank reports the transaction to the credit bureaus. Short of these things, there is little or no advantage for the borrower in deed in lieu of foreclosure and several distinct drawbacks. One is the potential for the bank to issue a form 1099 for debt which has been forgiven, creating a risk that the IRS will see taxable income there. The bank could also still sue you for the balance owed on the mortgage note after the bank resells the property. Finally, the biggest drawback is the loss of the right to live in the property for free while the foreclosure grinds slowly to its eventual conclusion. Even if the borrower finally loses the property, every month of rent free living is a cash benefit. With a timely help from an experienced bankruptcy or foreclosure defense attorney, this period of free living can often be expanded into years. Better still, if your financial situation improves, you retain the option of actually saving your home and reinstating the mortgage through a chapter 13 bankruptcy. You therefore owe it you yourself to retain a lawyer to represent you through this process, which should cost very little money in comparison to the amount of rent which the lawyer can potentially spare you. Attorney responses on this open website are intended for public educational purposes rather than as specific legal advice tailored your situation. Responses to your questions therefore do not create an attorney client relationship and should not be relied upon for making any important decisions until reconsidered by your privately retained attorney. You are; however, welcome to contact my office in Racine to discuss any additional questions which you may have. Answers on this website may also contain attorney advertising materials.