Can I hire an attorney to negotiate a deed in lieu of foreclosure directly with my lender/servicer even though we are current?

Our current home was originally purchased at the end of the market boom at $319,000. It’s now valued at $163,000. We were advised by one lender that we can purchase a new home and as soon as escrow closes we can request a deed in lieu on our current home with a mortgage law attorney and then file with the county directly bypassing our current lender altogether as long as at the time of surrender we were current on the loan. Is this true?

Asked on July 28, 2012 under Real Estate Law, California


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

You need to be aware that under the laws of all states in this coutnry the lender must accept via a signed and dated document a deed in lieu of foreclosure from a borrower.

You can certainly hire an attorney to negotiate a deed in lieu of foreclosure acceptance for you, but perhaps hiring an attorney to assist on a short sale for you would be better for your credit rating as opposed to the deed in lieu.

The advice that you received from one lender was entirely incorrect under real estate law that you have written about.

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