Many folks in our community do not understand why values may fluctuate so drastically in TBGCC. We cannot depend on the surrounding zip code markets to acquire value inside our boundaries. Zillow, Trulia, and many web based estimates use algorithms to summarize value by a broad use of data.
- Algorithms; defined means “ a procedure for solving a mathematical problem (as of finding the greatest common divisor) in a finite number of steps that frequently involves repetition of an operation! Simply means, “Gathering public record data to calculate value! How broad can this be? By no means does this data calculate upgrades to your home. An exception being, a permitted project becomes public record that can be grabbed by this tool source.
With so many variables, it’s impossible to predict stability in our community. One important step for us to consider, reach out to families that become custodians to homes our neighbors can no longer maintain. The family, for whatever reason, chooses to give a mortgaged home back to the lender in a foreclosure action. This impacts each and every one of us, and ultimately is currently the primary cause for unstable values in our community.
- Caution! It’s my opinion any family challenged by these circumstances should seek professional advice before liquidating to a neighbor, or outside party looking to capitalize on someone else’s hardships.
“Deed in lieu of foreclosure”
What is this, and how does it affect me? This is a deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.
The deed in lieu of foreclosure offers many advantages to both the borrower and the lender. The principal advantage to the borrower is that it immediately releases him/her from most or all of the personal indebtedness associated with the defaulted loan. The borrower may receive more generous terms than he/she would in a formal foreclosure that in many cases entangles probate and may drag out a final will, and or trust..
Another benefit to the borrower is that it hurts his/her credit or estate less than a foreclosure does. Advantages to a lender include a reduction in the time and cost of a repossession, lower risk of borrower revenge (metal theft and vandalism of the property before sheriff eviction), and additional advantages if the borrower subsequently files for bankruptcy.
If there are any junior liens a deed in lieu maybe less attractive option for the lender. The lender will likely not want to assume the liability of the junior liens from the property owner, *Example; HOA liens, and accordingly, the lender may prefer to foreclose in order to clean the title. Each case carries its own merits, and HOA management may favor negotiations oppose to foreclosure.
In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred. Both sides must enter into the transaction voluntarily and in good faith. The settlement agreement must have total consideration that is at least equal to the fair market value of the property being conveyed. Sometimes, the lender will not proceed with a deed in lieu of foreclosure if the outstanding indebtedness of the borrower exceeds the current fair value of the property. Other times, lenders will agree since they will end up with the property anyway and the foreclosure process is costly to the lender.
Because of the requirement that the instrument be voluntary, lenders will often not act upon a deed in lieu of foreclosure unless they receive a written offer of such a conveyance from the borrower that specifically states that the offer to enter into negotiations is being made voluntarily. This will enact the parol evidence rule and protect the lender from a possible subsequent claim that the lender acted in bad faith or pressured the borrower into the settlement. Both sides may then proceed with settlement negotiations.
Neither the borrower nor the lender is obliged to proceed with the deed in lieu of foreclosure until a final agreement is reached.