Q: We got caught up in Michigan’s real estate and job crisis as we were being transferred back by my husband’s company for a position again in our home state. We tried to sell our Michigan home for the past nine months.
Our lender is exploring a deed in lieu of foreclosure for us and they are in the title search phase. We’re worried we’re running out of time to make the deed in lieu happen, and think the lender may decide to foreclose.
After six months of making payments on a house we no longer lived in, we couldn’t continue paying on duplicate housing and are now over 90 days past due. It just occurred to me that the mortgage is in my husband’s name only, but title is in both our names. This was done a month or so after closing. Will the title come back clear? If not, will it be time consuming and involved to clear it in time to be accepted for deed in lieu?
A: Your husband purchased your current home in Michigan and shortly after closing he added your name to the title. When the title company prepares the title report for the property, the report will show that you and your husband own the property together.
If the lender agrees to the deed in lieu — that is the lender agrees to accept the title to your home directly from you and your husband without going through the process of suing your husband to foreclosing on the home — you and your husband will have to sign the deed to transfer the title of the home to the lender.
While the documentation to transfer title to your husband’s lender is simple, getting lenders to focus on your particular transaction may take additional time. There are thousands, perhaps even tens of thousands, of people in your situation in Michigan.
If you can get your lender to focus on your case, and the lender is willing to work with you, you should be able to accomplish the deed-in-lieu of foreclosure in the normal process of completing these types of transactions. Sometimes these deals take much longer than you’d like.
One last item, if the lender is accepting the deed-in-lieu of foreclosure from you, make sure they also agree to release you from any remaining balance of the loan you may owe them at that time. If they don’t agree to that, the lender can still come after you for any amount you still owe on the debt.
Just because the lender gets title to the home doesn’t mean that the debt is extinguished. If the home is ultimately sold for less than what you owe on the mortgage, the lender can sue you for the difference.
For more information, talk to a real estate attorney.
May 15, 2008.