Deed in who?

The story is an all too familiar one. The house you once loved has become a financial albatross, sitting squarely on your financial wind pipe. It’s getting increasingly difficult to pay the bills, errr breathe.

You’ve reached out to your lender and a mortgage modification isn’t possible “at this time.” Maybe you’ve been a victim of outright lender incompetence, maybe you don’t qualify because of your annual income or perhaps you’ve been forced to move, which means your property is no longer your “primary residence” and mortgage modifications aren’t offered for “investment property.”

You: “but wait, this isn’t an investment property, we lived there for three years and had to move for a new job.”

Bank Loan Officer: Sir, investment property doesn’t qualify.”

In any event, you’ve been unsuccessful with the mortgage modification process. What a shocker.

Well, not to worry. There must be other options right? Maybe not. A short sale seems like a poor choice because, well, you’d actually be required to sell your home. Selling a home in this market is about as difficult as scheduling a beer at the White House with President Obama or tracking down the tooth fairy for a game of chess. It ain’t happening.

You’ve heard other house trapped friends mention a “deed in lieu of foreclosure.” From what it sounds like, you can simply give your home back to the bank and it’s done. The bank gets its collateral and doesn’t have to foreclose on the home of another taxpayer who helped keep it in business after its I-Banking division got a little…recklesss? greedy? irresponsible? dishonest? Yep. All of the above. You get to remove the albatross and move on with life. You will once again be able to pay the bills, errr breathe.

You become enamored with the idea, bringing it up more than once while watching TV with the kids. “Man, Toy Story 2 is even better than when a cash strapped borrower supporting two households he can’t afford gets to walk away from his once prized domicile via a deed in lieu.” You begin to dream of the coveted deed in lieu. What will the paperwork look like?

The housing Gods smile on you and assign an actual living, breathing human to assist with your deed in lieu. Wowwy! Can’t wait to give my home, sorry investment property, back to the bank! Let’s do this. And you’re in luck. The deed in lieu guy assures you that the process won’t take more than 4-5 months once the “investor” signs off. So, you suck it up, sending in tax returns, personal financial statements, baby pictures, two locks of hair from your german sheppard and a mint condition gold coin.

Despite one rather scary phone call in which a bank representative assures you they have not received your financial information, things move forward. Your deed in lieu guy has good news: after the investor finishes burning three sticks of lavendar incense approximately three miles away from the north facing back door of your home, they’ll be ready to approve stage 1 of 5 and your deed in lieu will be 20% complete. The mood lifts at home, this is really going to happen!

One day the mail arrives. Your lender has inexplicably sold the servicing rights to your second mortgage. You immediately call deed in lieu guy. What gives? He assures you this won’t present a problem, all you need to do is secure the release of the second lien from the friendly servicer and you’ll be back in business. Just send over the paperwork.

You call New Liquidity Servicing and gasp, another human to speak with. Sure we’ll release the second lien, just send over $20,000 in certified funds…

Deed in lieu? This is what it has come to?