how to relinquish my house to mortage/ lender

my home is damage due to mold and water. the damage exceed the value of the house, so what can I do to give up and not get penalize by lenders for walking away from mortage

Asked on June 20, 2017 under Real Estate Law, Michigan

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

You can't relinquish it to them unless they voluntarily accept it--you can't force them to take the home. If it's in the shape you describe, it is very unlikely they will want it, for the same reason you don't want it--it needs expensive repairs to have any value.
And even if the do take it, that does not wipe out your debt: the home will be sold at auction, and whatever it brings in--likely to be little, given the condition you describe--will be taken off what you owe (after first subtracting the cost of the sale from the proceeds); you'll still owe whatever is left. Your debt would only be eliminated if they agree to take the home as payment or settlement in full of the debt--and again, given the impaired value, this is highly unlikely.
So you can talk to the lender about this, but it is unlikely to happen, or if it does, to help you in any significant way.


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